COMMON STOCK PURCHASE AGREEMENT
This
Common Stock Purchase Agreement (this “Agreement”)
is
made and entered into as of March 7, 2006 by and among Digital Presence,
Inc., a
Delaware corporation (the “Company”),
and
Xxxxxxxx.xxx, Incorporated, a Nevada corporation (“INFN”
or
“Investor”).
Whereas,
the
Company desires to sell to INFN, and the INFN desires to purchase from the
Company, shares of the Company’s Common Stock, par value $0.00001 per share,
(the “Common
Stock”
or
the
“Purchased
Shares”)
which
Purchased Shares shall have the rights, preferences, privileges and restrictions
on the terms and conditions set forth in this Agreement.
Now,
therefore, the
parties hereby agree as follows:
1.
AGREEMENT
TO PURCHASE AND SELL STOCK.
1.1.
Authorization.
As of
the Closing (as defined below) the Company will have authorized the issuance,
pursuant to the terms and conditions of this Agreement, of up to 1,000,000
Purchased Shares.
1.2.
Agreement
to Purchase and Sell.
The
Company agrees to sell to INFN at Closing, and INFN agrees, severally and
not
jointly, to purchase from the Company at Closing, the number of Purchased
Shares
set forth beside such Investor’s name on Exhibit
A,
at a
price of $0.45 per share.
2.
CLOSING.
2.1.
The
Company’s Bank Account.
On each
closing date described in Section 2.2 below, INFN shall make a deposit pursuant
to Section 2.2 below into the Company’s bank account at Commerce Bank with the
account holder on record being the Company, the routing number being 000000000,
and the account number being 7862430779 (“Company’s
Bank Account”)
2.2.
The
Closing.
The
Initial Closing, Second Closing, and Third Closing, as defined in this Section
2.2 shall be collectively referred to as the “Closing.”
(a)
Initial
Closing.
INFN
shall make an initial deposit of fifty thousand dollars ($50,000.00) in the
Company’s Bank Account on execution of this Agreement or on such other date as
the Company and INFN mutually agree upon (which date is referred to in this
Agreement as the “Initial
Closing”).
(b)
Second
Closing.
INFN
shall make a second deposit of one hundred twenty-five thousand dollars
($125,000.00) in the Company’s Bank Account on May 15, 2006 or on such other
date as the Company and INFN mutually agree upon (which date is referred
to in
this Agreement as the “Second
Closing”).
(c)
Third
Closing.
INFN
shall make a third and final deposit of one hundred twenty-five thousand
dollars
($125,000.00) in the Company’s Bank Account on June
15, 2006
or on such other date as the Company and INFN mutually agree upon (which
date is
referred to in this Agreement as the “Third
Closing”).
(d)
Company’s
Delivery Obligations.
Within
five (5) days of each of the Closing dates, the Company shall deliver to
INFN a
share certificate representing the amount of Purchased Shares as of the date
of
delivery.
3.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company hereby represents and warrants to INFN that, except as set forth
in the
Schedule of Exceptions (the “Schedule
of Exceptions”)
attached to this Agreement as Exhibit
B
(which
Schedule of Exceptions shall be deemed to be representations and warranties
to
INFN by the Company under this Section 3),
the
statements in the following paragraphs of this Section 3 are all true and
complete immediately prior to the Closing:
3.1.
Organization,
Good Standing, Corporate Power and Qualification.
The
Company has been duly incorporated and organized, and is validly existing
in
good standing, under the laws of the State of Delaware. The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Warrant, the Investor Rights Agreement in the form attached
to
this Agreement as Exhibit
C
(the
“Investor
Rights Agreement”),
the
Right of First Refusal and First Refusal Agreement in the form attached to
this
Agreement as Exhibit
D
(the
“First
Refusal Agreement”)
and
the Voting Agreement in the form attached to this Agreement as Exhibit
E
(the
“Voting
Agreement”
and
together with the Investor Rights Agreement and the First Refusal Agreement,
the
“Related
Agreements”),
to
own and operate its properties and assets and to carry on its business as
currently conducted and as presently proposed to be conducted. The Company
is
duly qualified to do business as a foreign corporation in good standing in
all
jurisdictions in which it is required to be qualified to do intrastate business
as the Company’s business is currently conducted and as presently proposed to be
conducted by the Company, except for jurisdictions in which failure to so
qualify could not reasonably be expected to have a material adverse effect
on
the business and operations of the Company taken as a whole.
3.2.
Capitalization.
The
capitalization of the Company immediately prior to the Closing consists of
the
following:
(a)
Common
Stock.
A total
of 1,000,000 authorized shares of Common Stock, par value $0.00001 per share
(the “Common
Stock”),
of
which 666,667 shares will be issued and outstanding.
(b)
Options,
Warrants, Reserved Shares.
Apart
from the exceptions noted in the Schedule of Exceptions, no shares of the
Company’s outstanding capital stock, or stock issuable upon exercise or exchange
of any outstanding options, warrants or rights, or other stock issuable by
the
Company, are subject to any preemptive rights, rights of first refusal or
other
rights to purchase such stock (whether in favor of the Company or any other
person), pursuant to any agreement or commitment of the Company.
2
(c)
Valid
Issuance.
The
outstanding shares of the capital stock of the Company are duly authorized
and
validly issued, fully paid and nonassessable, and have been approved by all
requisite stockholder and board action.
(d)
Outstanding
Security Holders.
Section
3.2(c)
of the
Schedule of Exceptions is a complete list of all outstanding stockholders,
option holders, warrant holders, convertible note holders and other security
holders of the Company as of immediately prior to the Closing.
3.3. Subsidiaries.
The
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, trust, joint venture, association,
or
other entity.
3.4.
Due
Authorization.
All
corporate action on the part of the Company’s directors and stockholders
necessary for (i) the authorization, execution, delivery of, and the performance
of all obligations of the Company under, this Agreement and the Related
Agreements, and (ii) the authorization, issuance, reservation for issuance
and
delivery of all of the Purchased Shares being sold under this Agreement.
This
Agreement, along with the Related Agreements, when executed and delivered,
will
constitute, valid and legally binding obligations of the Company, enforceable
in
accordance with their respective terms, except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization or others laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, (ii) applicable federal or state securities laws limits on
indemnification; and (iii) the effect of rules of law governing the availability
of equitable remedies.
3.5.
Valid
Issuance of Stock.
(a)
The
Purchased Shares, when paid for and then issued, as provided in this Agreement,
will be duly authorized and validly issued, fully paid and nonassessable.
(b)
Based
in part on the representations made by INFN in Section 4 hereof, the offer
and
sale of the Purchased Shares solely to INFN in accordance with this Agreement
are exempt from the registration and prospectus delivery requirements of
the
1933 Act and the securities registration and qualification requirements of
the
currently effective provisions of the securities laws of the state in which
INFN
resides.
(c)
The
outstanding shares of the capital stock of the Company are duly authorized
and
validly issued, fully paid and nonassessable, and have been approved by all
requisite stockholder action. Based in part on INFN’s representations made in
Section 4,
such
shares of such capital stock, and all outstanding options, warrants, convertible
notes and other securities of the Company, have been issued in full compliance
with the registration and prospectus delivery requirements of the 1933 Act
or in
compliance with applicable exemptions therefrom, the registration and
qualification requirements of all applicable securities laws of states of
the
United States and all other provisions of applicable securities laws of states
of the United States, including, without limitation, anti-fraud provisions.
3
3.7.
Litigation.
There
is no action, suit, proceeding, claim, arbitration or investigation (an
“Action”)
pending (or, to the Company’s knowledge, currently threatened) against the
Company, its activities or its properties before any court or governmental
agency. The Company is not a party to or subject to the provisions of any
order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality and there is no Action by the Company currently pending or
which
the Company intends to initiate. With respect to Additional Closings, the
above
representations made in this Section 3.7 are limited to matters that could
reasonably be expected to have a material adverse change in the condition,
financial or otherwise, of the Company. To the Company’s knowledge, there is no
factual or legal basis for any such Action that might result, individually
or in
the aggregate, in any material adverse change in the business, financial
condition, or assets of the Company. By way of example but not by way of
limitation, there are no Actions pending or, to the Company’s knowledge,
threatened (or any basis therefor known to the Company) relating to the prior
employment of any of the Company’s employees or consultants, their use in
connection with the Company’s business of any information, technology or
techniques allegedly proprietary to any of their former employers, clients
or
other parties, or their obligations under any agreements with prior employers,
clients or other parties.
3.8.
Invention
Assignment and Confidentiality Agreement.
Each
employee and contractor of the Company has entered into and executed an
Invention Assignment and Confidentiality Agreement in the form previously
disclosed to counsel for INFN. No employee has excluded any inventions or
intellectual property applicable to the Company’s business as presently
conducted or as currently contemplated to be conducted in the future from
assignment to the Company under the Invention Assignment and Confidentiality
Agreement or an employment agreement containing substantially similar
terms.
3.9.
Status
of Proprietary Assets.
(a)
Status.
The
Company has full title and ownership of, or is duly licensed under or otherwise
authorized to use, all patents, patent applications, trademarks, service
marks,
trade names, and copyrights, trade secrets, moral rights, confidential and
proprietary information, compositions of matter, formulas, designs and
proprietary rights (all of the foregoing collectively hereinafter referred
to as
the “Proprietary
Assets”),
necessary to enable it to carry on its business as now conducted without
any
conflict with or infringement upon the rights of others. A complete list
of all
the Company’s Proprietary Assets that are the subject of a patent application,
xxxx registration or copyright registration is set forth in Section 3.9(a)
of the
Schedule of Exceptions. To the Company’s knowledge, no third party has
any
ownership right, title, interest, claim in or lien on any of the Company’s
Proprietary Assets and the Company has taken, and in the future the Company
will
use its best efforts to take, all steps reasonably necessary to preserve
its
legal rights in, and the secrecy of, all its Proprietary Assets, except those
for which disclosure is required for legitimate business or legal
reasons.
4
(b)
Licenses;
Other Agreements.
The
Company has not granted, or agreed to grant, any options, licenses or agreements
of any kind relating to any Proprietary Asset of the Company outside of
nonexclusive end user licenses entered into in the ordinary course consistent
with past practice, nor is the Company bound by or a party to any option,
license or agreement of any kind with respect to any of its Proprietary Assets.
The Company is not obligated to pay any royalties or other similar payments
to
third parties with respect to the marketing, sale, distribution, manufacture,
license or use of any Proprietary Asset or any other property or rights.
(c)
No
Infringement.
The
Company has not violated or infringed, and is not currently violating or
infringing, and the Company has not received any communications alleging
that
the Company (or any of its employees or consultants) has violated or infringed
or, by conducting its business as proposed, would violate or infringe, any
Proprietary Asset of any other person or entity.
(d)
No
Breach by Employee.
The
Company is not aware that any employee or consultant of the Company is obligated
under any agreement (including licenses, covenants or commitments of any
nature)
or subject to any judgment, decree or order of any court or administrative
agency, or any other restriction that would interfere with the use of his
or her
best efforts to carry out his or her duties for the Company or to promote
the
interests of the Company or that would conflict with the Company’s business as
proposed to be conducted. The carrying on of the Company’s business by the
employees and contractors of the Company and the conduct of the Company’s
business as presently proposed, will not, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under which
any
of such employees or contractors or the Company is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions of
any
employees of the Company (or persons the Company currently intends to hire)
made
prior to their employment by the Company. At no time during the conception
of or
reduction of any of the Company’s Proprietary Assets to practice was any
developer, inventor or other contributor to such patents operating under
any
grants from any governmental entity or agency or private source, performing
research sponsored by any governmental entity or agency or private source
or
subject to any employment agreement or invention assignment or nondisclosure
agreement or other obligation with any third party that could adversely affect
the Company’s rights in such Proprietary Assets.
(e)
Privacy
Compliance.
The
Company has at all times complied with all applicable laws and regulations
regarding privacy and the protection of personal data.
5
3.10.
Compliance
with Law and Documents.
The
Company is not in violation or default of any provisions of its organizational
documents as amended to-date, and, the Company is in compliance with all
applicable statutes, laws, regulations and executive orders of the United
States
of America and all states, foreign countries or other governmental bodies
and
agencies
having jurisdiction over the Company’s business or properties where such
violation would have a material and adverse impact on the Company’s business.
The Company has not received any notice of any violation of any such statute,
law, regulation or order which has not been remedied prior to the date hereof.
The execution, delivery and performance of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby or
thereby will not result in any such violation or default, or be in conflict
with
or result in a violation or breach of, with or without the passage of time
or
the giving of notice or both, the Company’s organizational documents, any
judgment, order or decree of any court or arbitrator to which the Company
is a
party or is subject, any agreement or contract of the Company, or, to the
Company’s knowledge, a violation of any statute, law, regulation or order, or an
event which results in the creation of any lien, charge or encumbrance upon
any
asset of the Company.
3.11.
Registration
Rights.
Except
as provided in the Investor Rights Agreement, the Company is not under any
obligation to register under the 1933 Act any of its currently outstanding
securities nor is the Company obligated to register or qualify any such
securities under any state securities or blue sky laws.
3.12.
Title
to Property and Assets.
The
Company owns its properties and assets free and clear of all mortgages, deeds
of
trust, liens, encumbrances and security interests except for statutory liens
for
the payment of current taxes that are not yet delinquent and liens, encumbrances
and security interests which arise in the ordinary course of business and
which
do not affect material properties and assets of the Company. With respect
to the
property and assets it leases, the Company is in material compliance with
such
lease and, to the Company’s knowledge, the Company holds valid leasehold
interests in such assets free of any liens, encumbrances, security interests
or
claims of any party other than the lessors of such property and assets.
3.13.
ERISA
Plans.
The
Company does not have any Employee Pension Benefit Plan as defined in Section
3
of the Employee Retirement Income Security Act of 1974, as amended.
3.14.
Insurance.
The
Company has in full force and effect fire, casualty and liability insurance
policies, in such amounts (subject to reasonable deductibles) as are carried
by
similar companies.
3.15.
Certificate;
Bylaws.
The
Company Certificate and the Bylaws of the Company are in the form previously
provided to counsel to INFN.
3.16.
Labor
Agreements and Actions.
The
Company is not bound by or subject to any contract, commitment or arrangement
with any labor union, and to the Company’s knowledge, no labor union has
requested, sought or attempted to represent any employees, representatives
or
agents of the Company. There is no strike or other labor dispute involving
the
Company pending nor, to the Company’s knowledge, threatened, nor is the Company
aware of any labor organization activity involving its employees. The Company
is
not aware that any officer or employee intends to terminate their employment
with the Company, nor does the Company have any present intention to terminate
the employment of any of its officers or employees.
6
3.18.
Interested
Party Transactions.
No
officer or director of the Company or any “affiliate”
or
“associate”
(as
those terms are defined in Rule 405 promulgated under the 0000 Xxx) of any
such
person has had, either directly or indirectly, a material interest in: (i)
any
person or entity which purchases from or sells, licenses or furnishes to
the
Company any goods, property, technology, intellectual or other property rights
or services; or (ii) any contract or agreement to which the Company is a
party
or by which it may be bound or affected.
3.19.
Stock
Restriction Agreements.
Each
person who, pursuant to any benefit, bonus or incentive plan of the Company,
holds any currently outstanding shares of common stock or other securities
of
the Company or any option, warrant or right to acquire such shares or other
securities, has entered into or is otherwise bound by, an agreement granting
the
Company (i) the right to repurchase the shares for the original purchase
price
(or such other price approved by the Board of Directors of the Company (the
“Board”),
or to
cancel the option, warrant or right, in the event the holder’s employment or
services with the Company terminate for any reason, subject to release of
such
repurchase or cancellation right on terms and conditions specified by the
Board
and (ii) a right of first refusal with respect to all such shares. The Company
has furnished to special counsel to INFN true and complete copies of the
forms
of all such stock restriction agreements. All options granted under the Plan
will vest over a four (4) year period with 25% vesting twelve (12) months
after
the date of grant and the balance will vest ratably over the ensuing 36
months.
3.20.
Tax
Elections.
The
Company has not elected pursuant to the Internal Revenue Code of 1986, as
amended (the “Code”),
to be
treated as an “S”
corporation or a collapsible corporation pursuant to Section 341(f) or Section
1362(a) of the Code, nor has it made any other elections pursuant to the
Code
(other than elections which relate solely to matters of accounting, depreciation
or amortization) which would have a material affect on the Company, its
financial condition, its business as presently conducted or presently proposed
to be conducted or any of its properties or material assets.
3.21.Qualified
Small Business Stock.
As of
the Closing, the Purchased Shares sold hereunder constitute “qualified
small business stock”
as
defined in Section 1202(c) of the Code. The Company will use reasonable efforts
(as determined in relation to the potential benefits to the Company’s
stockholders) to comply with the reporting and record keeping requirements
of
Section 1202 of the Code and any regulations promulgated thereby.
3.22.
Disclosure.
This
Agreement and the Exhibits hereto (when read together) do not contain any
untrue
statement of a material fact and do not omit to state a material fact necessary
to make the statements therein or herein not misleading in light of the
circumstances under which they were made.
3.23.
Investment
Company Act.
The
Company is not an “investment
company”
within
the meaning of the Investment Company Act of 1940, as amended.
7
3.24.
Financial Statements. The unaudited balance sheet and
statements of operations and cash flows as of and for the period date of
inception of the Company through date of execution of this Agreement (the
“Financial
Statements”),
have
been prepared in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”)
applied on a consistent basis throughout the relevant period, except that
the
unaudited Financial Statements do not contain the footnotes required by GAAP.
The Financial Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein,
subject to normal year-end audit adjustments. Except as set forth in the
Financial Statements, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to the date of the Financial Statements and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and
not
required under GAAP to be reflected in the Financial Statements, which,
individually or in the aggregate, are not material to the financial condition
or
operating results of the Company
3.25.
Absence
of Certain Changes.
Since
the Company’s formation, there has not been any event or condition of any
character which has had a Material Adverse Effect including, but not limited
to:
(a)
any
change in the assets, liabilities, financial condition or operating results
of
the Company from the Financial Statements, except changes in the ordinary
course
of business which have not in the aggregate had a Material Adverse Effect;
(b)
any
damage, destruction, or loss, whether or not covered by insurance, materially
and adversely affecting the assets, financial condition, properties, operating
results or business of the Company;
(c)
any
change or amendment to any contract with expected receipts or expenditures
in
excess of $10,000 by which the Company or any of its assets or properties
is
bound or subject;
(d)
any
satisfaction or discharge of any lien, claim or encumbrance or payment of
any
obligation by the Company, except a satisfaction, discharge or payment made
in
the ordinary course of business that it is not material to the assets,
properties, financial condition, operating results or business of the Company;
(e)
any
sale, assignment or transfer of any patents, trademarks, copyrights, trade
secrets or other intangible assets, except a sale, assignment or transfer
made
in the ordinary course of business or that is not otherwise material to the
assets, properties, financial condition, operating results or business of
the
Company;
(f)
any
waiver by the Company of a valuable right or of a material
debt
owed
to it;
(g)
any
material change in any compensation arrangement or agreement with any
employee;
8
(i)
receipt of notice that there has been a loss of, or material order cancellation
by, any major customer of the Company;
(j)
any
mortgage, pledge, transfer of a security interest, lien, charge or encumbrance,
with respect to any of the Company’s material properties or assets, except liens
for taxes not yet due or payable;
(k)
any
loans or guarantees made by the Company to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other
than
travel advances and other advances made in the ordinary course of its business;
(l)
any
declaration, setting aside or payment or other distribution in respect of
any of
the Company’s capital stock, or any direct or indirect redemption, purchase or
other acquisition of any of such stock by the Company;
(m)
to
the Company’s knowledge, any other event or condition of any character that
could reasonably be anticipated to have a Material Adverse Effect;
(n)
the
issuance of any equity securities of the Company except for options for Common
Stock issued under the Plan; or
(o)
any
agreement or commitment by the Company to do any of the things described
in this
Section 3.25.
For
purposes of this Agreement, “Material
Adverse Effect”
shall
mean a material adverse effect on the business, property, financial condition,
prospects or results of operations of the Company.
3.26.
Taxes.
The
Company has timely filed or has obtained presently effective extensions with
respect to all federal, state, county, local and foreign tax returns which
are
required to be filed by it. All filed returns are true and correct in all
material respects and all taxes shown thereon to be due have been timely
paid
with exceptions not material to the Company.
3.27.
Material
Contracts and Obligations; Actions.
Section
3.26 of the Schedule of Exceptions lists all contracts and agreements (a)
with
expected receipts or expenditures in excess of $10,000, (b) involving a license
or grant of rights to or from the Company involving Proprietary Assets or
other
proprietary information applicable to the business of the Company, (c) providing
for indemnification by the Company with respect to infringements of Proprietary
Assets, (d) between the Company and any officer, director or 5% or greater
shareholder, or (e) involving any loans or advances by the Company to any
officer, director or employee which are outstanding as of the date of the
Closing. All such contracts and agreements are legally binding, valid, and
in
full force and effect in all material respects. The Company has not (w) declared
or paid any dividends or authorized or made any distribution
upon or
with respect to any class or series of its capital stock, (x) incurred any
indebtedness for money borrowed or any other liabilities individually in
excess
of $10,000 or, in the case of indebtedness and/or liabilities individually
less
than $10,000, in excess of $20,000 in the aggregate, (y) made any loans or
advances to any person, other than ordinary advances for travel expenses,
or (z)
sold, exchanged or otherwise disposed of any of its assets or rights, other
than
the sale of its inventory in the ordinary course of business. For the purposes
of this section, all indebtedness, liabilities, agreements, understandings,
instruments, contracts and proposed transactions involving the same person
or
entity (including persons or entities the Company has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts.
9
3.28.
Books
and Records.
The
minute books of the Company contain complete and accurate records of all
meetings and other corporate actions of its shareholders and its Board of
Directors and committees thereof. The stock ledger of the Company is complete
and reflects all issuances, transfers, repurchases and cancellations of shares
of capital stock of the Company. Except for amendments necessary to satisfy
representations and warranties or conditions contained herein (the form of
which
amendments has been approved by INFN), the Company Certificate and Bylaws
of the
Company are in the form previously provided to special counsel for the
INFN.
4.
REPRESENTATIONS,
WARRANTIES AND CERTAIN AGREEMENTS OF
INVESTOR.
INFN
hereby represents and warrants to, and agrees with, the Company, severally
and
not jointly, as of the Closing that:
4.1.
Authorization.
This
Agreement constitutes INFN’s valid and legally binding obligation, enforceable
in accordance with its terms except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors’ rights generally and (ii)
the effect of rules of law governing the availability of equitable remedies.
INFN represents that it has full power and authority to enter into this
Agreement, and the Related Agreements.
4.2.
Purchase
for Own Account.
The
Purchased Shares to be purchased by INFN hereunder will be acquired for
investment for its own account, not as a nominee or agent, and not with a
view
to the public resale or distribution thereof within the meaning of the 1933
Act,
and INFN has no present intention of selling, granting any participation
in, or
otherwise distributing the same. INFN also represents that it has not been
formed for the specific purpose of acquiring Purchased Shares.
4.3.
Disclosure
of Information.
At no
time was INFN presented with or solicited by any publicly issued or circulated
newspaper, mail, radio, television or other form of general advertising or
solicitation in connection with the offer, sale and purchase of the Purchased
Shares. INFN has received or has had full access to all the information it
considers necessary or appropriate to make an informed investment decision
with
respect to the Purchased Shares to be purchased by it under this Agreement.
INFN
further has had an opportunity to ask questions and receive answers from
the
Company regarding the terms and conditions of the offering of the Purchased
Shares and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort
or
expense) necessary to verify any information furnished to INFN or to which
INFN
had access. The foregoing, however, does not in any way limit or modify the
representations and warranties made by the Company in Section
3.
10
4.4.
Investment
Experience.
INFN
understands that the purchase of the Purchased Shares involves substantial
risk.
INFN: (i) has experience as an investor in securities of companies in the
development stage and acknowledges that INFN is able to fend for itself,
can
bear the economic risk of its investment in the Purchased Shares and has
such
knowledge and experience in financial or business matters that INFN is capable
of evaluating the merits and risks of this investment in the Purchased Shares
and protecting its own interests in connection with this investment and/or
(ii)
has a preexisting personal or business relationship with the Company and
certain
of its officers, directors or controlling persons of a nature and duration
that
enables INFN to be aware of the character, business acumen and financial
circumstances of such persons. INFN represents that the office in which its
investment decision was made is located at the address on Exhibit
A.
4.5.
Intentionally
left blank.
4.6.
Regulation
S Representations and Restrictions.
INFN is
nota
United
States Person as defined in Rule 902(k) of Regulation S under the Securities
Act
of 1933. The offer and sale of the Purchased Shares to INFN was made in an
offshore transaction (as defined in Rule 902(h) of Regulation S), no directed
selling efforts (as defined in Rule 902(c) of Regulation S) were made in
the
United States, and INFN is not acquiring the Purchased Shares for the account
or
benefit of any U.S. Person and:
(a)
will
not, during the Restricted Period applicable to the Purchased Shares set
forth
in the legend below and to any certificate representing the Purchased Shares,
offer or sell any of the foregoing securities (or create or maintain any
derivative position equivalent thereto) in the United States, to or for the
account or benefit of a United States Person or other than in accordance
with
Regulation S; and
(b)
will,
after the expiration of the applicable Restricted Period, offer, sell, pledge
or
otherwise transfer the Purchased Shares (or create or maintain any derivative
position equivalent thereto) only pursuant to registration under the 1933
Act or
any available exemption therefrom and, in any case, in accordance with
applicable state securities laws.
INFN
acknowledges and agrees that the Company shall not register the transfer
of the
Purchased Shares in violation of these restrictions.
4.7.
Restricted
Securities.
INFN
understands that the Purchased Shares are characterized as “restricted
securities”
under
the 1933 Act inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under the 1933 Act and
applicable regulations thereunder such securities may be resold without
registration under the 1933 Act only in certain limited circumstances. In
this
connection, INFN represents that it is familiar with Rule 144 of the U.S.
Securities and Exchange Commission (the “SEC”),
as
presently in effect, and understands the resale limitations imposed thereby
and
by the 1933 Act.
INFN
understands that the Company is under no obligation to register any of the
securities sold hereunder except as provided in the Investor Rights Agreement.
INFN understands that no public market now exists for any of the Purchased
Shares and that it is uncertain whether a public market will ever exist for
the
Purchased Shares.
11
4.8.
Further
Limitations on Disposition.
Without
in any way limiting the representations set forth above, INFN further agrees
not
to make any disposition of all or any portion of the Purchased Shares unless
and
until:
(a)
there
is then in effect a registration statement under the 1933 Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement; or
(b)
INFN
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and, if requested by the Company, at the expense of
INFN
or its transferee, with an opinion of counsel, reasonably satisfactory to
the
Company, that such disposition will not require registration of such securities
under the 1933 Act.
Notwithstanding
the provisions of paragraphs (a) and (b) above, no such registration statement
or opinion of counsel shall be required: (i) for any transfer of any Purchased
Shares in compliance with SEC Rule 144 or Rule 144A, or (ii) for any transfer
of
any Purchased Shares by an Investor that is a partnership or a corporation
to
(A) a partner of such partnership or stockholder of such corporation, (B)
a
controlled affiliate of such partnership or corporation, (C) a retired partner
of such partnership who retires after the date hereof, (D) the estate of
any
such partner or stockholder, or (iii) for the transfer by gift, will or
intestate succession by any Investor to his or her spouse or lineal descendants
or ancestors or any trust for any of the foregoing; provided
that in
each of the foregoing cases the transferee agrees in writing to be subject
to
the terms of this Section 4 to the same extent as if the transferee were
an
original Investor hereunder.
4.9.
Legends.
It is
understood that the certificates evidencing the Purchased Shares will bear
the
legends set forth below:
(a)
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “ACT”),
OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES
ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
12
The
legend set forth in (a) above shall be removed by the Company from any
certificate evidencing Purchased Shares upon delivery to the Company of an
opinion by counsel, reasonably satisfactory to the Company, that a registration
statement under the 1933 Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Company issued the Purchased Shares.
4.10.
Foreign
Investors.
If
Investor is not a United States Person, INFN hereby represents that it has
satisfied itself as to the full observance of the laws of its jurisdiction
in
connection with the acquisition of the Purchased Shares, including (i) the
legal
requirements within its jurisdiction for the acquisition of the Purchased
Shares, (ii) any foreign exchange restrictions applicable to such acquisition,
(iii) any governmental or other consents that may need to be obtained, and
(iv)
the income tax and other tax consequences, if any, that may be relevant to
the
purchase, holding, redemption, sale or other transfer of the Purchased Shares.
INFN’s acquisition of and continued beneficial or legal ownership of the
Purchased Shares, will not violate any applicable securities or other laws
of
its jurisdiction. In addition, it is understood that the certificates evidencing
the Purchased Shares issued to Investor that are not United States persons
will
bear the legends set forth below:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION, AND THE COMPANY DOES NOT INTEND TO REGISTER THEM.
PRIOR
TO MARCH 7, 2006, THE SHARES MAY NOT BE OFFERED OR SOLD (INCLUDING OPENING
A
SHORT POSITION IN SUCH SECURITIES) IN THE UNITED STATES OR TO U.S. PERSONS
AS
DEFINED BY RULE 902(k) ADOPTED UNDER THE ACT, OTHER THAN TO DISTRIBUTORS,
UNLESS
THE SHARES ARE REGISTERED UNDER THE ACT, OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE. PURCHASERS OF SHARES PRIOR TO MARCH
7,
2006, MAY RESELL SUCH SECURITIES ONLY PURSUANT TO AN EXEMPTION
FROM REGISTRATION
UNDER THE ACT OR OTHERWISE IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S OF THE ACT, OR IN TRANSACTIONS EFFECTED
OUTSIDE OF THE UNITED STATES PROVIDED THEY DO NOT SOLICIT (AND NO ONE ACTING
ON
THEIR BEHALF SOLICITS) PURCHASERS IN THE UNITED STATES OR OTHERWISE ENGAGE(S)
IN
SELLING EFFORTS IN THE UNITED STATES AND PROVIDED THAT HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
THE
ACT. A HOLDER OF THE SECURITIES
WHO IS A DISTRIBUTOR, DEALER, SUB-UNDERWRITER OR OTHER SECURITIES PROFESSIONAL,
IN ADDITION, CANNOT PRIOR TO MARCH 7, 2006 RESELL THE SECURITIES TO A U.S.
PERSON AS DEFINED BY RULE 902(k) OF REGULATION
S UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.
13
5.
CONDITIONS
TO INVESTOR’S OBLIGATIONS AT CLOSING.
The
obligations of INFN under Section 2.1
of this
Agreement are subject to the fulfillment or waiver, on or before the Closing,
of
each of the following conditions, the waiver of which shall not be effective
against any Investor who does not consent to such waiver, which consent may
be
given by written, oral or telephone communication to the Company, its counsel
or
to special counsel to INFN:
5.1.
Representations
and Warranties True.
Each of
the representations and warranties of the Company contained in Section
3
shall be
true and complete on and as of the Closing with the same effect as though
such
representations and warranties had been made on and as of the date of the
Closing.
5.2.
Performance.
The
Company shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Closing and shall have obtained all
approvals, consents and qualifications necessary to complete the purchase
and
sale described herein.
5.3.
Company
Certificate Effective.
The
Company Certificate shall have been duly adopted by the Company by all necessary
corporate action of its Board and stockholders, and shall have been duly
filed
with and accepted by the Secretary of State of the State of Delaware.
5.4.
Compliance
Certificate.
The
Company shall have delivered to INFN at the Closing a certificate signed
on its
behalf by its President, Chief Executive Officer, or Chief Financial Officer
certifying that the conditions specified in Sections 5.1,
5.2,
5.3
and
5.8
have
been fulfilled and stating that there shall have been no material adverse
change
in the business, financial condition, or assets of the Company not previously
disclosed to INFN in writing.
5.5.
Securities
Exemptions.
The
offer and sale of the Purchased Shares to INFN pursuant to this Agreement
shall
be exempt from the registration and/or qualification requirements of the
1933
Act and all applicable state securities laws.
5.6.
Proceedings
and Documents.
All
corporate and other proceedings in connection with the transactions contemplated
at the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to INFN and to INFN’s special counsel, and
they shall each have received all such counterpart originals and certified
or
other copies of such documents as they may reasonably request. Such documents
shall include (but not be limited to) the following:
(a)
Certified
Charter Documents.
A copy
of the Company Certificate and the Bylaws of the Company (as amended through
the
date of the Closing), certified by the Secretary of the Company as true and
correct copies thereof as of the Closing.
14
(c)
Secretary’s
Incumbency Certificate.
A
certificate of the Secretary or an Assistant Secretary or other officer of
the
Company certifying the names of the officers of the Company authorized to
sign
this Agreement, the certificates for the Purchased Shares and the other
documents, instruments or certificates to be delivered pursuant to this
Agreement by the Company or any of its officers, together with the true
signatures of such officers.
(d)
Good
Standing Certificates.
Good
standing certificates issued by the Delaware Secretary of State dated within
five (5) days of the Closing.
5.7.
Bylaws.
The
Bylaws of the Company shall be in the form previously presented to special
counsel to INFN and shall provide that the authorized number of members of
the
Board of the Company shall be 3 persons.
5.8.
No
Material Change.
There
shall have been no material adverse change in the business, financial condition,
prospects or assets of the Company, since the Balance Sheet Date. Additionally,
there shall have been no pending or threatened litigation against the Company
or
any of its assets, including but not limited to its Proprietary Assets.
5.9.
Investor
Rights Agreement.
The
Company shall have executed and delivered the Investors’ Rights Agreement.
5.10.
First
Refusal Agreement.
The
Company shall have executed and delivered the First Refusal Agreement.
5.11
Voting
Agreement.
The
Company shall each executed the Voting Agreement.
5.12 Payment
of Expenses.
The
Company shall have paid the fees and expenses identified in Section 7.8
of this
Agreement.
6.
CONDITIONS
TO THE COMPANY’S OBLIGATIONS AT CLOSING.
The
obligations of the Company to INFN under this Agreement are subject to the
fulfillment or waiver on or before the Closing of each of the following
conditions by INFN:
6.1
.Representations
and Warranties.
The
representations and warranties of INFN contained in Section 4
shall be
true and complete on the date of the Closing with the same effect as though
such
representations and warranties had been made on and as of the Closing.
6.2.
Payment
of Purchase Price.
INFN
shall have delivered to the Company the purchase price specified for INFN
on
Exhibit
A
in
accordance with the provisions of Section 2.
15
6.3.
Company
Certificate Effective.
The
Company Certificate shall have been duly adopted by the Company by all necessary
corporate action of its Board and stockholders, and shall have been duly
filed
with and accepted by the Secretary of State of the State of Delaware.
6.4.
Securities
Exemptions.
The
offer and sale of the Purchased Shares to INFN pursuant to this Agreement
shall
be exempt from the registration requirements of the 1933 Act, the qualifications
requirements of the Law and the registration and/or qualification requirements
of all other applicable state securities laws.
7.
GENERAL
PROVISIONS.
7.1.
Warranties;
Survival.
(a)
The
representations, warranties and covenants of the Company contained in or
made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by any investigation
of, or knowledge with respect to, the subject matter thereof made by or on
behalf of INFN or its counsel.
(b)
The
representations, warranties and covenants of INFN contained in or made pursuant
to this Agreement shall survive the execution and delivery of this Agreement
and
the Closing and shall in no way be affected by any investigation of, or
knowledge with respect to, the subject matter thereof made by or on behalf
of
any of the Company or its counsel.
7.2.
Successors
and Assigns.
Except
as otherwise provided in this Agreement, this Agreement, and the rights and
obligations of the parties hereunder, will be binding upon and inure to the
benefit of their respective successors, assigns, heirs, executors,
administrators and legal representatives.
7.3.
Governing
Law.
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Delaware, without giving effect to that body of laws pertaining
to
conflict of laws.
7.4.
Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered will be deemed an original, and all of which together
shall constitute one and the same agreement.
7.5.
Titles
and Headings.
The
titles, captions and headings of this Agreement are included for ease of
reference only and will be disregarded in interpreting or construing this
Agreement. Unless otherwise specifically stated, all references herein to
“sections”
and
“exhibits”
will
mean “sections”
and
“exhibits”
to
this
Agreement.
7.6.
Notices.
Any and
all notices required or permitted to be given to a party pursuant to the
provisions of this Agreement will be in writing and will be effective and
deemed
to provide such party sufficient notice under this Agreement on the earliest
of
the following:
16
All
notices for delivery outside the United States will be sent by facsimile
or by
express courier. Notices by facsimile shall be machine verified as received.
All
notices not delivered personally or by facsimile will be sent with postage
and/or other charges prepaid and properly addressed to the party to be notified
at the address or facsimile number as follows, or at such other address or
facsimile number as such other party may designate by one of the indicated
means
of notice herein to the other parties hereto as follows:
(a)
if to
INFN, at INFN’s respective address as set forth on Exhibit
A
hereto.
(b)
if to
the Company, marked “Attention:
Xxxxx Xxxxxxx, President and
CEO”,
at 00
Xxxxxxxxx Xx., Xxxxxxxxxx, Xxxxxxxx 00000.
7.7.
No
Finder’s Fees.
Each
party represents that it neither is nor will be obligated for any finder’s or
broker’s fee or commission in connection with this transaction other than the
obligations of the Company pursuant to the Consulting Agreements. INFN agrees
to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finders’ or broker’s fee (and any asserted
liability) for which the Investor or any of its officers, partners, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless INFN from any liability for any commission or compensation in the
nature of a finder’s or broker’s fee (and any asserted liability) for which the
Company or any of its officers, employees or representatives is
responsible.
7.8.
Costs,
Expenses.
Each
party shall bear its own expenses, including reasonable legal fees and costs
related to this transaction.
7.9.
Amendments
and Waivers.
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.
Any amendment or waiver effected in accordance with this Section 7.9 shall
be
binding upon each holder of any Purchased Shares at the time outstanding,
each
future holder of such securities, and the Company; provided,
however,
that no
condition set forth in Section 5.1
may be
waived with respect to any Investor who does not consent thereto. No delay
or
failure to require performance of any provision of this Agreement shall
constitute a waiver of that provision as to that or any other instance. No
waiver granted under this Agreement as to any one provision herein shall
constitute a subsequent waiver of such provision or of any other provision
herein, nor shall it constitute the waiver of any performance other than
the
actual performance specifically waived.
17
7.11.
Entire
Agreement.
This
Agreement, the Related Agreements and the exhibits hereto (but not including
any
other documents delivered pursuant to this Agreement or any Related Agreement
that is not signed by each party hereto), constitute the entire agreement
and
understanding of the parties with respect to the subject matter of this
Agreement, and supersede any and all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect
to the
specific subject matter hereof. Investor is not relying on any representation
of
the Company other than those made herein, including the exhibits hereto and
in
the Related Agreements.
7.12.
Further
Assurances.
The
parties agree to execute such further documents and instruments and to take
such
further actions as may be reasonably necessary to carry out the purposes
and
intent of this Agreement.
7.13.
Adjustments
for Stock Splits, Etc. Wherever
in this Agreement there is a reference to a specific number of shares of
Common
Stock or Preferred Stock of the Company of any class or series or dollar
amount
per share, then, upon the occurrence of any subdivision, combination, stock
dividend or recapitalization of such class or series of stock, the specific
number of shares or dollar amount per share so referenced in this Agreement
shall automatically be proportionally adjusted to reflect the affect on the
outstanding shares of such class or series of stock by such subdivision,
combination, stock dividend or recapitalization.
7.14.
Facsimile
Signatures.
This
Agreement may be executed and delivered by facsimile and upon such delivery
the
facsimile signature will be deemed to have the same effect as if the original
signature had been delivered to the other party.
7.15.
Third
Parties.
Nothing
in this Agreement, express or implied, is intended to confer upon any person,
other than the parties hereto and their successors and assigns, any rights
or
remedies under or by reason of this Agreement.
7.16.
Costs
and Attorneys’ Fees.
In the
event that any action, suit or other proceeding is instituted concerning
or
arising out of this Agreement or any transaction contemplated hereunder,
each
party shall bear its own costs and attorneys’ fees incurred in each such action,
suit or other proceeding, including any and all appeals or petitions therefrom.
18
7.17.
Waiver
of Conflict of Interest.
INFN
and the Company is aware that Xxxxxx X. Xxxxxx, Esq. of Xxxxxx Alliance,
LLP
(“Xxxxxx
Alliance”)
may
have previously
performed and may continue to perform certain legal services for certain
of INFN
or its affiliates in matters unrelated to Xxxxxx Alliance’s representation of
the Company. In connection with its Investor representation, Xxxxxx Alliance
may
have obtained confidential information of INFN’s that could be material to his
representation of the Company in connection with negotiation, execution and
performance of this Agreement. By signing this Agreement, INFN and the Company
hereby acknowledges that the terms of this Agreement were negotiated between
INFN and the Company and are fair and reasonable and waives any potential
conflict of interest arising out of such representation or such possession
of
confidential information. INFN and the Company further represents that it
has
had the opportunity to be, or has been, represented by independent counsel
in
giving the waivers contained in this Section 7.17.
[Signature
Page Follows]
19
In
Witness Whereof,
the
parties hereto have executed this Common Stock Purchase Agreement as of the
date
first written above.
DIGITAL
PRESENCE, INC.
By:
________________________________
Name:
Xxxxx Xxxxxxx
Title:
President and Chief Executive Officer
INVESTOR:
XXXXXXX.XXX,
INCORPORATED
By:
________________________________
Name:
Xxxx Xxxxxxxx
Title:
Chief Executive Officer
[SIGNATURE
PAGE TO COMMON STOCK PURCHASE AGREEMENT]
20
LIST
OF EXHIBITS
|
Exhibit
A -
|
Schedule
of Investors
|
|
|
|
|
Exhibit
B -
|
Schedule
of Exceptions
|
|
|
|
|
Exhibit
C -
|
Form
of Investor Rights Agreement
|
|
|
|
|
Exhibit
D -
|
Form
of Right of First Refusal and Co-Sale Agreement
|
|
|
|
|
Exhibit
E -
|
Form
of Voting Agreement
|
21
Schedule
of Investors
|
Investor
|
Shares Purchased
|
Additional Shares
|
Aggregate
Purchase Price
|
Additional
Shares Aggregate
Purchase Price
|
||||
|
Xxxxxxxx.xxx,
Incorporated
0000
Xxxxx Xxx.
#0000,
Xxxxx
Xxxxxx, XX
00000
|
666,667
|
$300,000
|
||||||
|
TOTALS:
|
22
