EXHIBIT 99.16
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
[February __, 2002], among EXCHANGE APPLICATIONS, INC. a Delaware corporation
(the "Company"), EXSTATIC SOFTWARE, INC. (f/k/a XXXX XXXXXXX, INC.), a
Washington corporation ("eXstatic" and together with the Company, the
"Issuers"), and the purchasers (each a "Purchaser" and together, the
"Purchasers") identified on the signature page hereto.
WHEREAS, the Issuers wish for SVB to enter into the New SVB
Facility and to extend additional credit to the Issuers upon the terms and
conditions set forth therein.
WHEREAS, SVB is only willing to enter into the New SVB
Facility if the Purchasers agree to enter into this Agreement and further agree
to subordinate their right to repayment of any Drawdowns made hereunder to
repayment of the SVB Facilities.
WHEREAS, the Issuers believe that it is in their best interest
to enter into this Agreement with the Purchasers and wish to induce the
Purchasers to enter into this Agreement and agree to subordinate their right to
repayment of any Drawdowns made hereunder to repayment of the SVB Facilities.
WHEREAS, the Purchasers are willing to enter into this
Agreement and commit to fund Drawdowns requested by the Issuers, all upon the
terms and subject to the conditions set forth herein and in the other Financing
Documents.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used and not otherwise defined in this
Agreement have the meaning ascribed to them below or in the other locations of
this Agreement specified below:
(a) "Affiliate" means, with respect to any specified
Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such specified Person. As used in this definition, the term "control"
(including, with correlative meaning, the terms "controlling," "controlled by"
and "under common control with") as used with respect to any Person, means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting Securities, by contract or otherwise.
(b) "Agreement" means this Agreement, as the same may be
amended, modified or supplemented from time to time pursuant to the terms
hereof.
(c) "April 16 Warrants" means the Warrants dated as of
April 16, 2001, issued by the Company to Insight.
(d) "Business" means the providing of marketing
automation and enterprise customer relationship management solutions by the
Company and its Subsidiaries.
(e) "Business Day" means each day except for Saturday,
Sunday, federal holidays and any other state-recognized holidays in the States
of New York and Massachusetts.
(f) "By-laws" has the meaning ascribed to such term in
Section 4.1.
(g) "Certificate of Incorporation" has the meaning
ascribed to such term in Section 4.1.
(h) "Claim" means any claim, demand, assessment,
judgment, Order, cause of action, or other Proceeding.
(i) "Closing" has the meaning ascribed to it in Section
3.2(a)(i).
(j) "Closing Date" has the meaning ascribed to it in
Section 3.2(a)(i).
(k) "Collateral" has the meaning ascribed to it in the
Security Agreement.
(l) "Commission" means the United States Securities and
Exchange Commission.
(m) "Commission Filings" means all reports, registration
statements and other filings filed by the Company with the Commission (and all
notes, exhibits and schedules thereto and documents incorporated by reference
therein).
(n) "Committed Amount" has the meaning ascribed to such
term in Section 2.1.
(o) "Common Stock" means the common stock, $.001 par
value per share, of the Company.
(p) "Company" has the meaning ascribed to such term in
the preamble.
(q) "Company Contracts" has the meaning ascribed to such
term in Section 4.8.
(r) "Contract" means any written or oral loan contract,
agreement, or credit agreement, note, bond, mortgage, indenture, lease,
sublease, purchase order, instrument, permit, concession, franchise or license.
(s) "Convertible Debenture Documents" means (i) the
Securities Purchase Agreement, the Fifth Amended and Restated Registration
Rights Agreement, the Collateral Agency and Intercreditor Agreement and the
Security Agreement, each dated as of August 29, 2001, among the Purchasers and
the Issuer and certain other investors thereto (ii) the Security
Agreement among InSight and the Issuers dated as of July 26, 2001 and (iii) the
Subordination and Collateral Agency Agreement.
(t) "Convertible Debentures" means the 12% Senior Secured
Convertible Debentures issued by the Company to the Purchasers and certain other
Persons on August 29, 2001.
(u) "CVR" shall mean the Contingent Value Right issued by
the Company to the Purchasers on the Signing, substantially in the form of
Exhibit B attached hereto.
(v) "Default" has the meaning ascribed to it in the
Notes.
(w) "Drawdown" has the meaning ascribed to it in Section
3.2(a).
(x) "Drawdown Request" has the meaning ascribed to it in
Section 3.2(a)(i).
(y) "Drawdown Termination Date" means April 25, 2002,
unless there is an Event of Default under the New Svb Facility as defined in the
New SVB facility.
(z) "EBITDA" shall mean the Company's earnings before
interest, taxes, depreciation and amortization, each as determined in accordance
with generally accepted accounting principles (without giving effect to
extraordinary or non-recurring items or non-cash charges).
(aa) "Encumbrances" means any liens, charges,
encumbrances, claims, options, proxies, pledges, security interests, or other
similar rights of any nature.
(bb) "Equipment" means all of the Company's present and
hereafter acquired machinery, molds, machine tools, motors, furniture, equipment
furnishings, fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs,
goods and other tangible personal property (other than Inventory) of every kind
and description used in Company's operations or owned by the Company and any
interest in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
(cc) "Equity Incentive Plans"(1) means the (i) 2000
Customer Analytics Holdings, Inc. Equity Incentive Plan, (ii) 1999 Customer
Analytics, Inc. Stock Option and Purchase Plan, (iii) 1999 GBI Stock Acquisition
Plan, (iv) 1999 Knowledge Stream Partners, Inc. Stock Option Plan, (v) 1998
Stock Incentive Plan, (vi) 1998 Director Stock Option Plan, (vii) 1998 Employee
Stock Purchase Plan and (viii) 1996 Stock Incentive Plan, each as amended, and
any other stock option, issuance, appreciation rights or other equity incentive
plan for the directors, officers and employees of, and consultants to, the
Company, which plan has been approved by the Board or appropriate committee
thereof.
(dd) "Event of Default" has the meaning ascribed to such
term in the Notes.
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(1) Company to update.
(ee) "Exchange Act" means the Securities and Exchange Act
of 1934, as amended.
(ff) "Existing SVB Facility" shall mean the Loan and
Security Agreement, dated April 25, 2001, among the Issuers and SVB, as amended.
(gg) "eXstatic" has the meaning ascribed to it in the
preamble.
(hh) "Financing Documents" has the meaning ascribed to
such term in Section 4.3.
(ii) "Fundamental Documents" means the documents by which
any Person (other than an individual) establishes its legal existence or which
govern its internal affairs. The "Fundamental Documents" of the Company are the
Certificate of Incorporation and the By-laws.
(jj) "GAAP" means United States generally accepted
accounting principles, consistently applied.
(kk) "Governmental Entity" means any federal, state,
municipal, or other government, governmental or quasi-governmental department,
commission, board, bureau, agency or instrumentality, any self-regulatory
organization or any court or tribunal.
(ll) "Guaranty" means any obligation, contingent or
otherwise, or any Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person in any
manner, whether directly or indirectly, including any obligation of such Person
direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment of
such Indebtedness or other obligation, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness or other
obligation of payment thereof, (iii) to purchase or otherwise pay for
merchandise, materials supplies, services or other property under an arrangement
which provides that payment for such merchandise, materials, supplies, services
or other property shall be made regardless of whether delivery of such
merchandise, materials, supplies, services or other property is ever made or
tendered, or (iv) to maintain the working capital, equity capital or other
financial statement condition of any primary obligor, provided, however, that
the term Guaranty shall not include endorsement of instruments for deposit and
collection in the ordinary course of business.
(mm) "Indebtedness" of a Person means, with regard to such
Person and any Subsidiaries of such person, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by (or which customarily would be evidenced by) bonds
debentures, notes or similar instruments, (iii) all reimbursement obligations of
such Person with respect to letters of credit and similar instruments, (iv) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (v) all
obligations of such Person incurred, issued or assumed as the deferred purchase
price of property or services other than accounts payable incurred and paid on
terms customary in the business of such Person (it being understood that
"deferred purchase price" in connection with any purchase of property or assets
shall include only that portion of the purchase price which shall be deferred
beyond the date on which the purchase is actually consummated), (vi) all
obligations secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (vii) all obligations of such
Person under forward sales, futures, options and other similar hedging
arrangements (including interest rate hedging or protection agreements), (viii)
all Guaranties by such Person of obligations of others, (ix) all capitalized
lease obligations of such Person and (x) the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer, but
only to the extent to which there is recourse to such Person for payment of such
Indebtedness.
(nn) "Insight" means, collectively, InSight Venture
Partners, IV, L.P., InSight Venture Partners (Cayman) IV, L.P., InSight Venture
Partners IV (Fund B), L.P. and InSight Venture Partners IV (Co-Investors), L.P.,
and their respective Affiliates.
(oo) "Issuers" has the meaning ascribed to it in the
Preamble.
(pp) "Law" means any constitution, law, statute, treaty,
rule, ordinance, permit, certificate, directive, requirement, regulation or
Order (in each case, whether foreign or domestic) of any Governmental Entity.
(qq) "Liability" means any liability or obligation,
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated and whether due or to become
due, regardless of when asserted.
(rr) "Lien" means any security interest, pledge, lien,
bailment (in the nature of a pledge or for purposes of security), mortgage, deed
of trust, the grant of a power to confess judgment, conditional sale or title
retention agreement (including any lease in the nature thereof), charge,
encumbrance, easement, reservation, restriction, cloud, right of first refusal
or first offer, option, commitment or other similar arrangement or interest in
real or personal property, whether oral or written.
(ss) "Liquidity Event" means (i) any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the Company
or (ii) any Sale of the Company.
(tt) "Loss" means any loss, Liability, Claim, cost,
damage, deficiency, Tax, penalty, fine or expense, including interest,
penalties, reasonable legal and accounting fees and expenses and all amounts
paid in investigation, defense or settlement of any of the foregoing which any
such party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of any indemnifiable
event or condition (including derivative actions brought through or in the name
of the Company).
(uu) "Material Adverse Effect" means, with respect to the
Company, a material adverse effect on the business, operations, assets,
conditions (financial or otherwise), operating results, Liabilities or prospects
of the Company and its Subsidiaries, taken as a whole.
(vv) "Maturity Date" means May 25, 2002.
(ww) "MicroStrategy Agreement" means the Payment and
Registration Rights Agreement, dated as of December 28, 1999, between the
Company and MicroStrategy Incorporated in effect on January 10, 2001 or as
amended from time to time.
(xx) "New SVB Facility" shall mean the Loan and Security
Agreement, dated as of the date hereof, among the Issuers and SVB, as amended
substantially in the form of Exhibit G attached hereto.
(yy) "Notes" means the Issuers' Senior Secured Notes,
substantially in the form of Exhibit A attached hereto.
(zz) "Obligations" has the meaning ascribed to it in the
Security Agreement.
(aaa) "Orders" means judgments, writs, decrees,
injunctions, orders, compliance agreements or settlement agreements of or with
any Governmental Entity or arbitrator.
(bbb) "Payment Instructions" has the meaning ascribed to it
in Section 3.2(a)(iii).
(ccc) "Percentage" has the meaning ascribed to it in
Section 3.2(a)(i).
(ddd) "Person" shall be construed in the broadest sense and
shall include an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, and any other entity, including a Governmental
Entity.
(eee) "Proceeding" means any action, suit, proceeding,
complaint, charge, hearing, inquiry or investigation before or by a Governmental
Entity or an arbitrator or administrator.
(fff) "Purchaser Indemnified Persons" shall have the
meaning ascribed to it in Section 7.2.
(ggg) "Purchasers" has the meaning ascribed to such term in
the preamble.
(hhh) "Representative" of a Person shall be construed
broadly and shall include such Person's partners, officers, directors,
employees, agents, counsel, accountants and other representatives.
(iii) "Sale of the Company" means (i) the sale of all or
substantially all of the Company's consolidated assets, (ii) the redemption,
recapitalization, issuance, sale or transfer of the outstanding shares of
capital stock, voting securities or fully diluted equity securities (including,
without limitation, equity securities issuable upon conversion or exercise (as
the case may be) of the Convertible Debentures and the exercise of Warrants
issued in connection therewith) of the Company, (iii) the merger or
consolidation of the Company with another person or entity, in each case, in one
or a series of related transactions and, in the case of clauses (ii) and (iii)
above under circumstances in which either: (x) the holders of the voting power
of the outstanding shares of capital stock and other voting securities of the
Company immediately prior to such transaction own less than 65% in voting power
of the outstanding shares of capital stock and other voting securities of the
Company or the surviving or resulting corporation or acquirer,
as the case may be, immediately following such transaction or (y) the holders of
the fully diluted equity securities of the Company immediately prior to such
transaction own less than 65% of the fully diluted equity securities of the
Company immediately following such transaction. A sale (or multiple sales) of
assets of one or more subsidiaries of the Company (whether by way of merger,
consolidation, reorganization or sale of all or substantially all of the assets
or securities) which constitutes all or a substantial portion of the
consolidated assets or revenues of the Company shall be deemed to be a Sale of
the Company. A series of related sales of equity or voting securities in which
either: (x) the holders of the voting power of the outstanding shares of capital
stock and other voting securities of the Company immediately prior to the first
transaction in such series of related sales own less than 65% in voting power of
the outstanding shares of capital stock and other voting securities of the
Company immediately following the consummation of any transaction that is part
of such series of related sales or (y) the holders of the fully diluted equity
securities of the Company immediately prior to the first transaction in such
series of related sales own less than 65% of the fully diluted equity securities
of the Company immediately following the consummation of any transaction that is
part of such series of related sales shall be deemed to be a Sale of the
Company.
(jjj) "Securities Act" means the Securities Act of 1933, as
amended.
(kkk) "Securities" means, with respect to any Person, such
Person's "securities" as defined in Section 2(1) of the Securities Act and
includes such Person's capital stock or other equity interests or any options,
warrants or other securities or rights that are directly or indirectly
convertible into, or exercisable or exchangeable for, such Person's capital
stock or other equity interests.
(lll) "Security Agreement" has the meaning ascribed to it
in Section 3.1(a)(iv).
(mmm) "Series A Preferred Stock" means the Series A
Convertible Redeemable Preferred Stock, $.001 par value per share, of the
Company.
(nnn) "Shortfall" has the meaning ascribed to it in Section
3.2(a)(ii).
(ooo) "Signing" has the meaning ascribed to such term in
Section 3.1(a).
(ppp) "Subject Person" has the meaning ascribed to such
term in the definition of "Subsidiary".
(qqq) "Subordination and Collateral Agency Agreement" has
the meaning ascribed to such term in Section 3.1(a)(iv).
(rrr) "Subsidiary" means, at any time, with respect to any
Person (the "Subject Person"), (i) any Person of which either (x) more than 50%
of the Securities entitled to vote in the election of directors or comparable
Persons performing similar functions (excluding Securities entitled to vote only
upon the failure to pay dividends thereon or other contingencies) or (y) more
than a 50% interest in the profits or capital of such Person, are at the time
owned or controlled directly or indirectly by the Subject Person or through one
or more Subsidiaries of the Subject Person or (ii) any Person whose assets, or
portions thereof, are consolidated with the net
earnings of the Subject Person and are recorded on the books of the Subject
Person for financial reporting purposes in accordance with GAAP.
(sss) "SVB Facilities" shall mean, collectively, the New
SVB Facility and the Existing SVB Facility.
(ttt) "SVB" shall mean Silicon Valley Bank.
(uuu) "Tax" means, with respect to any Person, all income
taxes (including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits Taxes, alternative or add-on minimum
Taxes, customs duties and other Taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to Tax and other
additional amounts imposed by any taxing authority (domestic or foreign) on such
Person (if any).
(vvv) "Warrants" means the Warrants to purchase Common
Stock issued by the Company to the Investors and certain other Persons on August
29, 2001.
1.2 RULES OF CONSTRUCTION.
The term "this Agreement" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "Best Knowledge" of the Company means actual knowledge of
the executive officers of the Company, including Xxxxxx Xxxxxxx, J. Xxxxx
Xxxxxx, Xxx Xxxxx, and Xxxx Xxxxxxx, after making reasonable inquiry of the
matters in question.(2) The use in this Agreement of the term "including" means
"including, without limitation." The words "herein," "hereof," "hereunder" and
other words of similar import refer to this Agreement as a whole, including the
schedules and exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular section, subsection,
paragraph, subparagraph or clause contained in this Agreement. All references to
sections, schedules and exhibits mean the sections of this Agreement and the
schedules and exhibits attached to this Agreement, except where otherwise
stated. The title of and the section and paragraph headings in this Agreement
are for convenience of reference only and shall not govern or affect the
interpretation of any of the terms or provisions of this Agreement. The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, as in each case the context may require or permit. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Unless expressly provided otherwise, the measure of a period of one month
or year for purposes of this Agreement shall be that date of the following month
or year corresponding to the starting date, provided that if no corresponding
date exists, the measure shall be that date of the following
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(2) Company to update.
month or year corresponding to the next day following the starting date. For
example, one month following February 18 is March 18, and one month following
March 31 is May 1.
ARTICLE II
PURCHASE AND SALE
OF THE NOTES AND CVRS
2.1 NOTES AND CVRS.
(a) Issuance of the Notes and CVR. At the Signing, and
subject to the terms and conditions contained in this Agreement, (i) the Issuers
shall issue, sell and deliver to each Purchaser (A) a Note substantially in the
form of Exhibit A and (B) a CVR, substantially in the form of Exhibit B, (ii)
each Purchaser shall agree to fund Drawdowns under its Note requested by the
Issuers, on one or more Closing Dates, up to the aggregate amount set forth
opposite such Purchaser's name on Schedule I hereto under the heading "Committed
Amount" (the "Committed Amounts"). Each such Drawdown to occur on a Closing Date
shall be subject to the satisfaction of each of the conditions set forth in
Article III. The Issuers' agreement with each Purchaser is a separate agreement,
each Purchaser's Committed Amount is a separate obligation and the sale of Notes
and CVRs to each Purchaser is a separate sale. Notwithstanding anything
contained herein to the contrary, the aggregate amount of all Drawdowns under
all Notes shall not exceed $4,000,000. Each Issuer shall be jointly and
severally liable for all of the monetary and other obligations of the Issuers
under this Agreement and each other Financing Document. The Company and the
Purchasers agree not to accrue any expense or income, for federal, state or
local income tax purposes, relating to the CVRs until one or more CVR
Contingencies have been satisfied and each CVR is fully exercisable by the
Purchasers. The obligations of the Purchaser hereunder shall automatically
terminate on the Drawdown Termination Date.
(b) Use of Proceeds. The Issuers shall use the proceeds
of all Drawdowns solely to pay outstanding principal Indebtedness under the New
SVB Facility and to reimburse the Purchasers' expenses as contemplated in
Section 8.15 hereof and for no other uses or purposes whatsoever.
ARTICLE III
THE CLOSING; DELIVERY OF DOCUMENTS AT THE CLOSING
3.1 THE SIGNING.
(a) Simultaneously with the execution and delivery of
this Agreement by all parties hereto (the "Signing") the Issuers shall deliver
to the Purchasers (and at each Closing shall deliver 3.1(a)(x) and 3.1(a)(xi)
only):
(i) the Notes, which Notes shall have been duly
authorized, executed and delivered by the Issuers and shall be in full
force and effect and enforceable against the Issuers in accordance with
their terms;
(ii) the CVRs, which CVRs shall have been duly
authorized, executed and delivered by the Issuers and shall be in full
force and effect and enforceable against the Issuers in accordance with
their terms;
(iii) the opinion of Xxxxxxx Xxxx LLP, counsel to
the Company, addressed to the Purchasers, dated as of the closing, in
substantially the form attached hereto as Exhibit F;
(iv) the Security Agreement in substantially the
form attached hereto as Exhibit C (the "Security Agreement") and the
Subordination and Collateral Agency Agreement in substantially the form
attached hereto as Exhibit D (the "Subordination and Collateral Agency
Agreement"), and any other Financing Document, if any, each of which
shall have been duly authorized, executed and delivered by the Issuers
and the other parties thereto (other than the Purchasers) and shall be
in full force and effect and enforceable against the Issuers and the
other parties thereto in accordance with its terms;
(v) all consents, approvals, authorizations,
filings and notices required to consummate the transactions
contemplated hereby shall have been obtained, made or given and shall
be in full force and effect, including, without limitation, all
required consents under the SVB Facilities and the Convertible
Debenture Documents;
(vi) receipt of revised cash flow budget through
June 30, 2002, acceptable to the Purchasers;
(vii) evidence satisfactory to the Purchasers of
the filings of all UCC-1 Financing Statements and any other required
security interest filings recordings, and other actions, necessary or
advisable to the Purchasers with a perfected security interest in the
Collateral (as defined in the Security Agreement);
(viii) a certificate of the Secretary or an
Assistant Secretary of each Issuer, dated as of the Closing and
certifying on behalf of such Issuer: (A) that attached thereto is a
true, correct and complete copy of each of the Fundamental Documents of
such Issuer as in effect on the date of such certification; (B) that
attached thereto is a true, correct and complete copy of all
resolutions adopted by the Board of Directors (and any committees
thereof) of such Issuer authorizing (1) the execution, delivery and
performance of the Financing Documents, and (2) the issuance, sale and
delivery of the Notes and CVRs, and that all such resolutions in (1)
and (2) are in full force and effect; and (C) the incumbency and
specimen signature of all officers of such Issuer executing the
Financing Documents, and any certificate or instrument furnished
pursuant hereto;
(ix) a certification by another officer of each
Issuer as to the incumbency and signature of the officer signing the
certificate referred to in clause (viii);
(x) a telegram, telex or other acceptable method
of confirmation from the Secretaries of State of the States of Delaware
and Massachusetts dated no more than five business days prior to the
date hereof as to the due incorporation and continued good standing of
the Company and from the Secretary of State of the State of Washington
as to the due incorporation and continued good standing of eXstatic, as
applicable;
(xi) such documents, agreements and instruments
as may be reasonably requested by the Purchasers and any other
information with respect to the operations and affairs of the Company
and its Subsidiaries as the Purchasers may reasonably request; and
(xii) a duly executed copy, by all parties
thereto, of the New SVB Facility, in substantially the form attached
hereto as Exhibit G.
(b) The obligation of the Issuers to issue, deliver and
sell the Notes and the CVRs at the Signing is subject to the Company's receipt
of all consents, approvals, authorizations, filings and notices required to
consummate the transactions contemplated hereby, including, without limitation,
the consent of SVB.
3.2 DRAWDOWNS.
(a) From and after the Signing to and including the
Drawdown Termination Date, the Company shall have the right to request that the
Purchasers purchase drawdowns under the Notes hereto (each such drawdown, a
"Drawdown"); provided, that the Company shall not request aggregate Drawdowns
from any Purchaser in excess of such Purchaser's Committed Amount set forth
opposite such Purchaser's name in Schedule I attached hereto. The procedures and
conditions for any Drawdown shall be as follows:
(i) At least [ten (10)] Business Days prior to
any proposed Closing, the Company shall provide written request (a
"Drawdown Request") to each Purchaser of the Company's request for a
Drawdown, such request to include (A) the date of the proposed Drawdown
(such date, subject to the satisfaction of all required conditions, the
"Closing Date"; and such Drawdown, upon actual funding thereof, the
"Closing,"), (B) the amount of such Drawdown, which shall not, in the
case of any Purchaser, exceed such Purchaser's Percentage of the
aggregate amount of all such requested Drawdowns irrespective of
whether the other Purchasers comply with their obligations to fund such
Drawdown Request (such obligations of the Purchasers being several and
not joint). The "Percentage" for each Purchaser shall mean the
percentage set forth opposite such Purchaser's name under the heading
"Percentage" on Schedule I attached hereto;
(ii) Together with each Drawdown Request, the
President or Chief Executive Officer of the Company shall deliver a
certificate to the Purchasers certifying: (A) that SVB is entitled to a
scheduled payment of principal (including at maturity) of the New SVB
Facility, (B) that SVB has made written demand to the Company for such
payment of principal under the New SVB Facility, and the date that such
payment was due has occurred, (C) that the Company has used
commercially reasonable efforts to either negotiate an extension or
deferral of the New SVB Facility or to obtain additional financing that
would enable it to repay its obligations to SVB under the New SVB
Facility, (D) that notwithstanding such efforts, the Issuers do not
have sufficient cash and liquid assets to pay the amount required to be
paid under the New SVB Facility, (E) a detailed calculation, reasonably
satisfactory to the Purchasers, demonstrating (1) all available cash on
hand and expected receipts, (2) the aggregate fair market value of all
liquid assets, (3) the amount of any additional financing or other
funding sources
available to make such payment under the New SVB Facility, (4) the
shortfall amount (the "Shortfall") with respect to such principal
payment and (5) that the aggregate amount of the requested Drawdown
does not exceed the amount of such Shortfall; and
(iii) Together with each Drawdown Request, the
President or Chief Executive Officer of the Company shall deliver
irrevocable written payment instructions (the "Payment Instructions"),
acknowledged by SVB, to the Purchasers, pursuant to which (A) the
Company shall direct the Purchasers to pay the proceeds of such
Drawdowns (net of the fees and expenses (and any prior unpaid fees and
expenses) that such Purchaser is entitled to withhold pursuant to
Section 8.15 hereof) directly to SVB to make the scheduled payment (or
portion thereof) required to be paid under the New SVB Facility, and
(B) SVB shall acknowledge the amount of the scheduled payment of
principal (or portion thereof) then due and owing to it and remaining
unpaid, together with wire transfer instructions for the payment of
such Shortfall.
(b) Subject to: (v) the Company's delivery, at each
Drawdown, of the items required to be delivered pursuant to Section 3.1(a)(x)
and 3.1(a)(xi), (w) the satisfaction or continuing satisfaction of the
provisions set forth in clause (a) above and the other terms and conditions
hereof (including, without limitation, Section 3.1(a)), (x) each of the
representations and warranties set forth in Article IV being true and correct as
of the date hereof and as of each Closing Date, (y) no Default or Event of
Default existing and being continuing, on the Closing Date, and (z) the Drawdown
Termination Date not having occured:
(i) each Purchaser shall purchase a Drawdown
under the Notes from the Issuers in an amount equal to such Purchaser's
Percentage of the Drawdown being requested by the Issuers for such
Closing, by funding in accordance with the Payment Instructions; and
(ii) each Purchaser shall be entitled to update
Schedule I to the Note issued to it at the Signing to add the amount of
the Drawdown that such Purchaser is purchasing at such Closing.
(c) The Notes do not constitute a revolving loan and any
amounts repaid or prepaid under the Notes may not be reborrowed.
(d) Each Closing shall take place no earlier than (10)
days after the Company's delivery of a Drawdown Request at the offices of
X'Xxxxxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
time as the parties to such Closing shall mutually agree.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ISSUERS
Each Issuer hereby represents and warrants to each of the Purchasers as
follows:
4.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
Each of the Company and its Subsidiaries is duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or formation and has all requisite corporate or other power and
authority to own, lease and operate its properties and other assets and to carry
on its business as presently conducted and as proposed to be conducted. Each of
the Company and its Subsidiaries is duly qualified and in good standing to
transact business as a foreign Person in those jurisdictions listed on Schedule
4.1, which constitute all the jurisdictions in which the character of the
property owned, leased or operated by the Company or such Subsidiary or the
nature of the activities conducted by the Company or such Subsidiary makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect. eXstatic is a wholly owned subsidiary of the
Company. The Company has delivered to the Purchasers a correct and complete copy
of the Amended and Restated Certificate of Incorporation of the Company in
effect on the date hereof (the "Certificate of Incorporation"). A copy of the
Amended and Restated By-laws of the Company in effect on the date hereof (the
"By-laws") is filed as an exhibit to the Commission Filings.
4.2 CAPITALIZATION.(3)
(a) Immediately upon consummation of the Closing, the
authorized, issued and outstanding capital stock of the Company shall consist
of:
(i) 10,000,000 shares of Preferred Stock, of
which 5,330,000 are designated as Series A Preferred Stock and
5,325,645 are validly issued and outstanding, fully paid and
nonassessable; and
(ii) 150,000,000 shares of Common Stock, of
which:
(A) [________] shares are validly issued and
outstanding, fully paid and nonassessable;
(B) [________] shares shall be reserved for
issuance upon conversion of the Series A Preferred Stock;
(C) [________] shares are reserved as issuance
upon conversion of the Convertible Debentures;
(D) [________] shares shall be reserved for
issuance upon exercise of the Warrants;
(E) 1,179,337 shares are reserved for issuance
upon exercise of the April 16 Warrant;
(F) [366,565] shares are reserved as treasury
shares; and
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(3) Company to update.
(G) [ ] shares are reserved for issuance in
accordance with the Equity Incentive Plans.
(b) The Company agrees that the Capitalization Table
attached hereto as Exhibit H accurately reflects the capitalization of the
Company.
(c) Except as contemplated by the Financing Documents or
as otherwise set forth on Schedule 4.2, there are, and immediately after
consummation of the Closing there will be, no (i) outstanding warrants, options,
agreements, convertible Securities or other commitments or instruments pursuant
to which the Company is obligated to issue, sell or otherwise transfer any
Securities or (ii) preemptive or similar rights to purchase or otherwise acquire
Securities of the Company pursuant to any provision of Law, the Company's
Fundamental Documents or any Contract to which the Company is a party.
(d) All Securities issued by the Issuers have been issued
in transactions in accordance in all material respects with applicable state and
federal Laws governing the sale and purchase of Securities.
4.3 AUTHORIZATION OF AGREEMENT, ETC.
Each Issuer has all requisite corporate power and authority to execute
and deliver this Agreement, the Notes, the CVRs, the Subordination and
Collateral Agency Agreement and the Security Agreement and any and all other
documents and instruments necessary or appropriate in order to effectuate fully
the terms and conditions of each such agreement and all related transactions
(collectively, the "Financing Documents") and to perform its obligations under
and to consummate the transactions contemplated by each such Financing Document.
The execution, delivery and performance by each Issuer, of each Financing
Document to which it is a party and the issuance, sale and delivery of the Notes
and the CVRs has been duly authorized by all requisite corporate action by each
Issuer, and this Agreement and each other Financing Document has been duly
executed and delivered by each Issuer. No other corporate or stockholder action
on the part of any Issuer, is necessary for such authorization, execution and
delivery. Each of the Financing Documents constitutes a legal, valid and binding
obligation of each Issuer, enforceable against each Issuer, in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar Laws affecting creditors'
rights and remedies generally, and subject, in the case of enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
Proceeding at law or in equity).
4.4 NO CONFLICTS.
Except as otherwise disclosed on Schedule 4.4, the execution, delivery
and performance by each Issuer, of this Agreement and each of the other
Financing Documents, the issuance, sale and delivery of the Notes and the CVR
and compliance with the provisions hereof and thereof by such Issuer, does not
or will not, (a) violate any provision of Law or any Order applicable to any
Issuer or any of its properties or assets or (b) conflict with or result in any
breach of any of the terms, conditions or provisions of, or constitute (with
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the
creation of, any Encumbrance upon any of the properties or assets of any Issuer
or, except as previously disclosed in writing to each of the Purchasers, any
Company Contract to which it is a party or (c) conflict with or violate any
provision of the Fundamental Documents of any Issuer currently in effect.
4.5 APPROVALS.
No permit, authorization, consent or approval of or by, or any
notification of or filing with, any Person is required in connection with the
execution, delivery or performance by each Issuer, of each Financing Document to
which it is a party.
4.6 COMMISSION FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all Commission Filings that it
has been required to file with the Commission under the Securities Act and the
Exchange Act. As of the respective dates of their filing with the Commission, or
the date of any amendment thereto filed on or prior to the date hereof, the
Commission Filings complied as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(b) Each of the historical consolidated financial
statements of the Company (including any related notes or schedules) included in
the Commission Filings was prepared in accordance with GAAP (except as may be
disclosed therein), and complied in all material respects with the rules and
regulations of the Commission. Such financial statements fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of operations,
cash flows and changes in stockholders' equity for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal,
recurring year-end audit adjustments). Except as set forth or reflected in the
Commission Filings filed prior to the date hereof or as set forth on Schedule
4.6, neither the Company nor any of its Subsidiaries have any liabilities or
obligations of any nature (whether accrued, absolute, contingent, unasserted or
otherwise) that individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect.
4.7 PRIVATE OFFERING.
Assuming the accuracy of the representations of the Purchasers in
Section 5.2, the offering, sale, issuance and delivery by the Issuers of the
Notes and the CVR are exempt from the registration and prospectus delivery
requirements of the Securities Act and applicable state securities laws and the
rules and regulations promulgated thereunder. Neither the Company nor any of its
Subsidiaries, nor any Person acting on behalf of such Person, has offered or
sold or will offer or sell any Securities, or has taken or will take any other
action (including, without limitation, any offering of any Securities of the
Company under circumstances that would require, under the Securities Act or any
applicable blue-sky laws, the integration of such offering with the transactions
contemplated by this Agreement), which would subject the transactions
contemplated by this Agreement to the registration provisions of the Securities
Act.
4.8 CERTAIN CONTRACTS.
All material Contracts to which the Company or any of its Subsidiaries
is a party or may be bound that are required by Item 610(b)(10) of Regulation
S-K to be filed as exhibits to, or incorporated by reference in, the Company's
Form 10-K or the Company's Form 10-Q are referred to herein as "Company
Contracts". All Company Contracts are legal, valid and binding and in full force
and effect on the date hereof except as set forth on Schedule 4.8A, to the
extent they have previously expired in accordance with their terms or to the
extent such failure to be so legal, valid and binding would not reasonably be
expected to have a Material Adverse Effect and, except as set forth on Schedule
4.8B, neither the Company nor any of its Subsidiaries has violated any provision
of, or committed or failed to perform any act that, with or without notice,
lapse of time, or both, would constitute a default under the provisions of any
Company Contract, except for defaults that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
4.9 INTELLECTUAL PROPERTY RIGHTS.
(a) To the Company's Best Knowledge, each of the Company
and its Subsidiaries owns or is licensed to use all trademarks, copyrights,
service marks, and applications and registrations therefor, and all trade names,
domain names, web sites, customer lists, trade secrets, proprietary processes
and formulae, inventions, know-how, other confidential and proprietary
information, and other industrial and intellectual property rights necessary to
permit each of the Company and its Subsidiaries to carry on its business as
presently conducted. To the Company's Best Knowledge, each of the Company and
its Subsidiaries has the right to bring infringement actions with respect to all
trademarks, copyrights, service marks, trade names, domain names, trade secrets,
proprietary processes and formulae, inventions, know how and other confidential
and proprietary information that it owns. Except as otherwise disclosed in
Schedule 4.9, all registered patents, copyrights, trademarks, and service marks
owned by the Company and its Subsidiaries are in full force and effect and are
not subject to any taxes or maintenance fees. Except as otherwise disclosed in
Schedule 4.9, there is no pending or, to the Best Knowledge of the Company,
threatened Claim or litigation against the Company or any Subsidiary contesting
the right to use its intellectual property rights, asserting the material misuse
of any thereof, or asserting the material infringement or other material
violation of any intellectual property right of a third party. All inventions
and know-how conceived by employees of the Company or its Subsidiaries and used
by the Company and its Subsidiaries in the business of the Company and its
Subsidiaries as currently conducted are owned by the Company or its
Subsidiaries. Except as disclosed on Schedule 4.9, each of the Company and its
Subsidiaries has taken reasonable security measures to protect the secrecy,
confidentiality, and value of its trade secrets, proprietary processes,
formulae, inventions, know-how and other confidential and proprietary
information.
(b) Except as otherwise disclosed in Schedule 4.9, no
Proceedings or Claims in which the Company or any Subsidiary alleges that any
Person is materially infringing upon, or otherwise materially violating, any
patents, trademarks, copyrights, service marks, and applications and
registrations therefor are pending, and none have been served by, instituted or
asserted by the Company or any Subsidiary, nor are any Proceedings or Claims
threatened
alleging any such material violation or material infringement, nor does the
Company or any Subsidiary know of any valid basis for any such Proceedings or
Claims.
4.10 LITIGATION OTHER PROCEEDINGS OR CLAIMS.
Except as set forth on Schedule 4.10, there are no (i) Proceedings or
Claims pending against or initiated by the Company or any Subsidiary or, to the
best knowledge of the Company, threatened against the Company or any Subsidiary,
whether at law or in equity, whether civil or criminal in nature, except for
Proceedings or Claims that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, or (ii) material
Orders with respect to the Company or any Subsidiary.
4.11 TERMINATION OF EMPLOYMENT.
To the Company's Best Knowledge, except as set forth on Schedule 4.11
no executive officer or key employee, or any group of key employees, intends to
terminate their employment with the Company or any Subsidiary, nor does the
Company or any Subsidiary have a present intention to terminate the employment
of any officer, key employee or group of key employees.
4.12 BROKERS.
Neither the Company nor any of its Subsidiaries have employed or
otherwise retained any broker or finder in connection with the transactions
contemplated by this Agreement.
4.13 REGISTRATION RIGHTS.
Except as contemplated by the Fifth Amended and Restated Registration
Rights Agreement and except as set forth on Schedule 4.13, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any shares of Common Stock or any other Securities of the Company.
4.14 NO MATERIAL BREACH
Neither of the Issuers is in breach of, or default under, any material
contract, including, but not limited to, the Existing SVB Facility and the
Convertible Debenture Documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company, as to
itself only, as follows:
5.1 AUTHORIZATION OF THE FINANCING DOCUMENTS.
Such Purchaser has the requisite power and authority (corporate or
otherwise) to execute, deliver and perform the Financing Documents to which it
is a party and the transactions contemplated thereby, and the execution,
delivery and performance by such Purchaser of the
Financing Documents to which it is a party have been duly authorized by all
requisite action by such Purchaser and each such Financing Document, when
executed and delivered by such Purchaser, constitutes a legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar Laws affecting creditors'
rights and remedies generally, and subject, in the case of enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
Proceeding at law or in equity).
5.2 INVESTMENT REPRESENTATIONS.
(a) The Notes and the CVRs to be purchased by such
Purchaser hereunder are being acquired for its own account, for investment and
not with a view to the distribution thereof in violation of the Securities Act
or applicable foreign or state securities Laws.
(b) Such Purchaser understands that (i) the Notes and the
CVRs have not been, registered under the Securities Act or applicable foreign or
state securities Laws, by reason of their issuance by the Company in a
transaction exempt from the registration requirements of the Securities Act and
applicable foreign and state securities Laws and (ii) the Notes and the CVRs,
may not Transfer such Securities to a third party (other than an Affiliate)
unless a subsequent disposition thereof is registered under the Securities Act
and applicable foreign and state securities Laws or is exempt from registration
thereof. Such Purchaser is an "accredited investor" (as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act).
(c) Such Purchaser has had a reasonable time prior to the
date hereof to ask questions and receive answers concerning the terms and
conditions of the offering of the Notes and the CVRs, and to obtain any
additional information which the Company possesses or could acquire without
unreasonable effort or expense, and has generally such knowledge and experience
in business and financial matters and with respect to investments in securities
of privately held companies as to enable such Purchaser to understand and
evaluate the risks of such investment and form an investment decision with
respect thereto.
(d) If such Purchaser is not an Affiliate of Insight,
such Purchase is not relying on any representation, warranty, statement,
document, act (including the fact that Insight is an investor in the Company and
a Purchaser) or investment expertise of Insight in making such Purchaser's
decision to purchase the Notes and the CVRs. In addition to making the above
representation and warranty to the Company, each Purchaser hereby makes such
representation and warranty to Insight.(4)
(e) Such Purchaser has not employed or otherwise retained
any broker or finder in connection with the transactions contemplated by this
Agreement.
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(4) Only applicable if Non-Insight investors participate.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 AMENDMENTS TO DEBT DOCUMENTS.
Neither the Company nor any of its Subsidiaries shall or shall
permit any change, amendment, supplement or other modification of any terms of
either of the SVB Facilities, or related documents without the prior consent of
the Purchasers who have committed at least 51% of the Committed Amounts and
funded Drawdowns.
6.2 FINANCIAL AND OTHER COVENANTS.
(a) Insurance. The Issuers shall, at all times insure
their tangible personal property Collateral in the amount of not less than Ten
Million Dollars ($10,000,000.00) and carry such other business insurance, with
insurers reasonably acceptable to the Purchasers, in such form and amounts as
the Purchasers may reasonably require, and the Issuers shall provide evidence of
such insurance to the Purchasers, so that the Purchasers is satisfied that such
insurance is, at all times, in full force and effect. All such insurance
policies shall name the Purchasers as additional loss payees and shall contain a
lenders loss payee endorsement(5) in form reasonably acceptable to the
Purchasers. Upon receipt of the proceeds of any such insurance, the Purchasers
shall apply such proceeds to the Obligations as the Purchasers shall determine
in their discretion, except that, provided no Default or Event of Default has
occurred and is continuing, the Purchasers shall release to the Company
insurance proceeds with respect to Equipment totaling less than $100,000, which
shall be utilized by the Issuers for the replacement of the Equipment with
respect to which the insurance proceeds were paid. The Purchasers may require
reasonable assurance that the insurance proceeds so released will be so used. If
the Issuers fails to provide or pay for any insurance, the Purchasers may, but
is not obligated to, obtain the same at the Issuers' expense. The Issuers shall
promptly deliver to the Purchasers copies of all reports made to insurance
companies.
(b) Litigation Cooperation. Should any third-party
Proceeding be instituted by or against the Purchasers with respect to any
Collateral or in any manner relating to the Issuers, the Issuers shall, without
expense to the Purchasers, make available the Issuers and their respective
officers, employees and agents and the Issuers' books and records, to the extent
that the Purchasers may deem them reasonably necessary in order to prosecute or
defend any such Proceeding.
(c) No Impairment. The Company shall take all action
necessary to obtain all approvals and consents necessary for it to satisfy all
of its obligations under this Agreement, the Notes and the CVRs.
(d) Application of Proceeds. Each of the parties hereto
agrees that all repayments of the Notes (including any premium and/or accrued
interest thereon) by the Issuers will be paid
----------
pro rata to the holders of the Notes based upon the principal amount then
outstanding to each of such parties.
(e) Senior Debt. Neither the Issuers, nor any of their
subsidiaries, will incur any Indebtedness that is senior in any way in right of
payment to the Purchasers' right to repayment of the Notes without the consent
of Purchasers who have committed to purchase at least 51% of the principal
amount of the Notes.
ARTICLE VII
INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS, ETC.
All statements contained in any of the Financing Document or any
closing certificate delivered by the Company, the Issuers, or the Purchasers
pursuant to this Agreement shall constitute representations and warranties by
the Issuers, or the Purchasers, as applicable, under this Agreement.
Notwithstanding any investigation made at any time by or on behalf of any party
hereto, all representations and warranties contained in this Agreement or made
in writing by or on behalf of the Issuers or any Purchaser, as applicable, in
connection with the transactions contemplated by this Agreement shall survive
the Signing and each Closing until the date that the Notes and the CVRs have
been paid in full. All agreements and covenants contained in this Agreement or
made in writing by or on behalf of the Issuers, or any Purchaser, as applicable,
in connection with the transactions contemplated by this Agreement shall survive
the Closing indefinitely or until they are earlier terminated by their terms.
7.2 INDEMNIFICATION.
(a) In addition to all other rights and remedies
available to the Purchasers, the Issuers shall indemnify, defend and hold
harmless each Purchaser and its Affiliates and their respective partners,
officers, directors, employees, agents and representatives (together with such
Purchaser, the "Purchaser Indemnified Persons") against all Losses in connection
with or arising from any Claim asserted against any Person (whenever made)
resulting from or caused by any transaction, status, event, condition,
occurrence or situation relating to, arising out of or in connection with (A)
the status, or conduct of the Business and affairs of, the Issuers, (B) the
execution, delivery and performance by the Issuers of this Agreement and the
other Financing Documents and the transactions contemplated hereby and thereby
or (C) any actions taken by or omitted to be taken by any of the Purchaser
Indemnified Persons in connection with this Agreement and the other Financing
Documents or the transactions contemplated hereby and thereby, except, in each
case, to the extent such Losses result from the gross negligence or willful
misconduct of the Purchaser Indemnified Persons.
(b) All indemnification rights hereunder shall survive
indefinitely the execution and delivery of the Financing Documents and the
consummation of the transactions contemplated herein and therein,
notwithstanding any inquiry or examination made for or on
behalf of, or any knowledge of any of the Purchasers and/or any of the other
Purchaser Indemnified Persons or the acceptance by any such Purchaser of any
certificate or opinion.
ARTICLE VIII
MISCELLANEOUS
8.1 PARTIES IN INTEREST; THIRD PARTY BENEFICIARIES ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the Issuers, the
Purchasers and their respective successors and assigns. Insight is an intended
third party beneficiary of the Purchasers' representations and warranties to the
Company set forth in Section 5.2(d)(6) hereof. No party hereto may assign this
Agreement, any other Financing Document or any of its rights, interests or
obligations hereunder or thereunder without the prior written consent of the
other parties; provided, however, that each Purchaser may assign any of its
rights under this Agreement, any other Financing Document or any other document
or investment contemplated hereby to any Affiliate, member or limited partner of
such Purchaser.
8.2 ENTIRE AGREEMENT.
This Agreement, each other Financing Document and the other writings
and agreements referred to herein or delivered pursuant hereto contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto.
8.3 PUBLIC ANNOUNCEMENTS.
Except as otherwise required by Law or by the rules of NASDAQ, so long
as this Agreement is in effect, neither the Company (or any of its Subsidiaries)
nor the Purchasers, will issue or cause the publication of any press release or
make any other public announcement with respect to the transactions contemplated
by this Agreement without the consent of the other party, which consent shall
not be unreasonably withheld. The Issuers and the Purchasers will cooperate with
each other in the development and distribution of all press releases and other
public announcements with respect to this Agreement and the transactions
contemplated hereby, and will furnish the other with drafts of any such releases
and announcements as far in advance as practicable.
8.4 NOTICES.
All notices, demands and requests of any kind to be delivered to any
party in connection with this Agreement shall be in writing and shall be deemed
to have been duly given if personally delivered or if sent by
internationally-recognized overnight courier or by registered or certified mail,
return receipt requested and postage prepaid, addressed as follows:
(a) if to the Issuers, to:
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(6) Only applicable if non-Insight investors participate.
Exchange Applications, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) If to Purchaser, to the address for such Purchaser
set forth on Schedule I hereto.
or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance with the
provisions of this Section 8.4. Any such notice or communication shall be deemed
to have been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of internationally-recognized overnight courier, on
the next business day after the date when sent and (iii) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted.
8.5 AMENDMENTS.
This Agreement may not be modified or amended, or any of the provisions
hereof waived, except by written agreement of the Issuers and the Purchasers who
have committed at least 51% of the Committed Amounts.
8.6 COUNTERPARTS.
This Agreement may be executed in any number of original or facsimile
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.7 HEADINGS.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.8 GOVERNING LAW.
(a) All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and construed
and enforced in accordance with the domestic
Laws of the State of New York without giving effect to any choice or conflict of
law provision or rule (whether in the State of New York or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of New York. In furtherance of the foregoing, the internal
Law of the State of New York will control the interpretation and construction of
this Agreement, even if under such jurisdiction's choice of law or conflict of
law analysis, the substantive Law of some other jurisdiction would ordinarily or
necessarily apply.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
8.9 NO THIRD PARTY RELIANCE.
Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Issuers contained in this Agreement (a)
are being given by the Issuers as an inducement to the Purchasers to enter into
this Agreement and the other Financing Documents (and the Issuers acknowledge
that the Purchasers have expressly relied thereon) and (b) are solely for the
benefit of the Purchasers. Accordingly, no third party (including, without
limitation, any holder of Securities of the Issuers) or anyone acting on behalf
of such third party (other than the Purchasers) shall be a beneficiary of such
representations and warranties and no such third party shall have any rights of
contribution against the Purchasers or the Issuers with respect to such
representations or warranties or any matter subject to or resulting in
indemnification under this Agreement or otherwise.
8.10 SUBMISSION TO JURISDICTION.
Any Proceeding with respect to this Agreement or the other Financing
Documents may be brought in the courts of the State of New York and the United
States of America for the Southern District of New York and, by execution and
delivery of this Agreement, each Issuer hereby accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each Issuer hereby irrevocably waives, in connection with any
such action or Proceeding, any objection, including, without limitation, any
objection to the venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action or Proceeding in
such respective jurisdictions. Each Issuer hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such action or
Proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at its address as set forth herein. Nothing herein shall
affect the right of the Purchasers to serve process in any other manner
permitted by Law or to commence Proceedings or otherwise proceed against the
Issuers in any other jurisdiction.
8.11 EXTENSION; WAIVER.
The parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement and (c) waive compliance with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party, and any such
waiver shall not operate or be construed as a waiver of any subsequent breach by
the other party; provided, however, that the Purchasers who have committed at
least 51% of the Committed Amounts shall be entitled to execute and deliver any
waiver on behalf of all Purchasers.
8.12 SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement and the other Financing Documents be enforced to the fullest extent
permissible under the Law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Agreement and the other Financing Documents would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement and the other Financing Documents or
affecting the validity or enforceability of such provision in any jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not be invalid, prohibited or unenforceable in such jurisdiction, it shall,
as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement and the other Financing Documents or
affecting the validity or enforceability of such provision in any other
jurisdiction.
8.13 INDEPENDENCE OF AGREEMENTS.
All agreements and covenants hereunder shall be given independent
effect so that if a certain action or condition constitutes a default under a
certain agreement or covenant, the fact that such action or condition is
permitted by another agreement or covenant shall not affect the occurrence of
such default, unless expressly permitted under an exception to such covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of the representation and warranty
first referred to in this sentence.
8.14 ACTIONS OF REPRESENTATIVES.
A decision, act, consent or instruction of the Company in
respect of any action hereunder shall constitute a decision of any Issuer and
shall be final, binding and conclusive upon each such Issuer and the Purchasers
may rely upon any decision, act, consent or instruction of the Company hereunder
as being the decision, act, consent or instruction of each and every such
Issuer. Notice delivered to the Company shall for all purposes constitute notice
to all Issuers. The foregoing shall be binding upon all Issuers and all
transferees and assignees thereof.
8.15 EXPENSES.
The Issuers agree to pay, and hold the Purchasers and/or their
representatives harmless against, as incurred, all liability for the payment of
(i) the actual, out-of-pocket costs and expenses incurred by the Purchasers (A)
at or prior to Signing, and at or prior to each Closing, in connection with the
transactions contemplated hereby, including, without limitation, all fees and
expenses of counsel, accountants and other advisors, in connection with the
preparation of the Financing Documents, the purchase of the Notes and the CVRs,
each Drawdown by the Company and the consummation of all of the transactions
contemplated by the Financing Documents, which shall be payable at the Signing,
and at each Closing and may be netted from the wire transfer as contemplated by
Section 3.2(a)(iii), (ii) the reasonable costs and expenses (including fees and
expenses of counsel, accountants and other advisors) incurred by the Purchasers
in connection with any amendment or waiver of, or enforcement of, any Financing
Documents, (iii) any costs reasonably incurred by the Purchasers in rendering
assistance to the Company or any of its Subsidiaries, to the extent the Company
or such Subsidiary requested such assistance (it being understood that the
Purchasers are not obligated to render, and may charge additional fees for, such
assistance), (iv) the reasonable fees and expenses incurred by the Purchasers in
any filing with any governmental authority with respect to its investment in the
Issuers or in any other filing with any governmental authority with respect to
the Company or any of its Subsidiaries that mentions the Purchasers or their
affiliates, and (v) any stamp or similar taxes which may be determined to be
payable in connection with the execution and delivery and performance of any of
the Financing Documents or any modification, amendment or alteration of any of
the Financing Documents, and all issue taxes in respect of the issuance of any
Notes or the CVRs.
* * * * *
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Securities Purchase Agreement as of the date first written above.
ISSUERS:
EXCHANGE APPLICATIONS, INC.
By: _______________________________________
Name: F. Xxxxxx Xxxxx
Title: Chief Financial Officer
EXSTATIC SOFTWARE, INC.
By: _______________________________________
Name: F. Xxxxxx Xxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Securities Purchase Agreement as of the date first written above.
PURCHASERS:
INSIGHT VENTURE PARTNERS IV, L.P.
INSIGHT VENTURE PARTNERS (CAYMAN) IV, L.P.
INSIGHT VENTURE PARTNERS IV
(FUND B), L.P.
INSIGHT VENTURE PARTNERS IV
(CO-INVESTORS), L.P.
By: Insight Venture Associates IV, L.L.C.,
the general partner of each of the foregoing
limited partnerships
By: _______________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Securities Purchase Agreement as of the date first written above.
SKP INVESTMENTS LLC
By: _______________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Securities Purchase Agreement as of the date first written above.
THK PRIVATE EQUITIES
By: _______________________________________
Name: Xxxxxxxx X. Xxxxxxxxxxxx
Title: Principal
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Securities Purchase Agreement as of the date first written above.
XXXXXX FAMILY FOUNDATION
By: _______________________________________
Name: Xxxx Xxxxxx
Title: Trustee
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Securities Purchase Agreement as of the date first written above.
BOSTON PIPES, LLC
By: _______________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Securities Purchase Agreement as of the date first written above.
____________________________________________
XXXXX XXXXXXXX
EXHIBIT A
Form of Notes
EXHIBIT B
Form of CVR
EXHIBIT C
Form of Security Agreement
EXHIBIT D
Form of Subordination and
Collateral Agency Agreement
EXHIBIT E
Form of Subordination Agreement
EXHIBIT F
Form of Xxxxxxx Xxxx Opinion
EXHIBIT G
Form of New SVB Facility
EXHIBIT H
Capitalization Table
SCHEDULE I
PURCHASERS INTERNAL ALLOCATION PERCENTAGE COMMITTED AMOUNT
---------- ------------------- ---------- ----------------
Insight Venture Partners IV, L.P. 76.666130% [__________]
Insight Venture Partners
(Cayman) IV, L.P. 10.537455% [__________]
Insight Venture Partners IV
(Fund B), L.P. 0.660033% [__________]
Insight Venture Partners IV
(Co-Investors), L.P. 12.136382% [__________]
000 Xxxxx Xxxxxx, 0xx Xxxxx Total 100.000000% [__________]
Xxx Xxxx, X.X. 00000
Xxxxxxxxx: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
X'Xxxxxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Nissan, Esq.
SKP Investments LLC [__________]
00 Xxxx Xxxx
Xxxxxxx XX 00000
THK Private Equities [__________]
x/x Xxxxxxxx X. Xxxxxxxxxxxx
0000 Xx. Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Boston Pipes, LLC [__________]
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Xxxxx Xxxxxxxx [__________]
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
(000) 000-0000
Xxxxxx Family Foundation [__________]
000 Xxx Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
(000) 000-0000
Schedule 4.2
Schedule 4.6
Schedule 4.8A
Schedule 4.8B
Schedule 4.9
Schedule 4.10
Schedule 4.11
Schedule 4.13
Schedule 6.3
