EXHIBIT 2
XXXXXXX.XXX, INC.
SERIES E NON-VOTING PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
This Agreement is made as of April 13, 2000 among XxxXxxx.xxx,
Inc., a Delaware corporation (the "COMPANY") and the persons and entities listed
on the Schedule of Investors attached hereto as Exhibit A (the "INVESTORS").
SECTION I
AUTHORIZATION AND SALE OF PREFERRED STOCK AND WARRANTS
1.1 AUTHORIZATION. The Company will authorize the sale and issuance of
up to 5,330,490 shares of its Series E Non-Voting Preferred Stock, (the
"SHARES"), having the rights, privileges and preferences as set forth in the
Amended and Restated Certificate of Incorporation (the "CERTIFICATE") in the
form attached to this Agreement as Exhibit B and warrants (the "WARRANTS") to
purchase up to 533,049 shares of its Series E Non-Voting Preferred Stock (the
"WARRANT SHARES").
1.2 SALE OF PREFERRED STOCK AND WARRANTS. Subject to the terms and
conditions hereof, at the Closing (as defined below) the Company will severally
issue and sell to each of the Investors and the Investors will severally buy
from the Company (i) the total number of Shares set forth opposite such
Investor's name in column 2 of the Schedule of Investors attached hereto as
Exhibit A (the "SCHEDULE OF INVESTORS") for the aggregate purchase price,
calculated on a per share purchase price of $9.38, set forth in column 3
opposite the Investor's name in the Schedule of Investors and (ii) Warrants to
purchase that total number of Warrant Shares set forth opposite such Investor's
name in column 4 of the Schedule of Investors for the aggregate purchase price,
calculated on a per Warrant Share purchase price of $0.01, set forth in column 5
opposite the Investor's name in the Schedule of Investors. The Company's
agreements with each of the Investors are separate agreements, and the sales to
each of the Investors are separate sales. The Company and each of the Investors
agree that as of the date hereof the fair market value of the Warrants is $.01
per Warrant Share.
SECTION II
CLOSING DATE; DELIVERY
2.1 CLOSING. The purchase and sale of the Shares shall take place in a
closing (the "CLOSING") at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 650 Page Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000
on or about April 13, 2000 or at such other time as the Company and the
Investors mutually agree upon.
2.2 DELIVERY. At the Closing, the Company will deliver to each Investor
(i) a certificate, registered in such Investor's name, representing the number
of Shares to be purchased by such Investor as specified in the Schedule of
Investors and (ii) a Warrant, registered in such
Investor's name, to purchase such number of Warrant Shares as set forth opposite
such Investor's name in the Schedule of Investors, against payment of the total
purchase price therefor by check payable to the Company, by wire transfer in
accordance with the Company's wiring instructions, or by a combination thereof.
Upon completion of the Closing, all purchasers of Shares shall be considered
"Investors" within the meaning of this Agreement.
SECTION III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto
as Exhibit C attached hereto (the "SCHEDULE OF EXCEPTIONS") attached hereto, the
Company represents and warrants to the Investors as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. The
Company has requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted, and
is in good standing in each jurisdiction where the failure to so qualify would
have a material adverse effect on its business or properties.
3.2 CORPORATE POWER. The Company will have at the Closing all requisite
legal and corporate power and authority to execute and deliver this Agreement
and any agreements set forth as exhibits hereto (collectively, the
"AGREEMENTS"), to sell and issue the Shares and Warrants hereunder, to issue the
Common Stock issuable upon conversion of the Shares and the Warrant Shares and
to carry out and perform its obligations under the terms of the Agreements.
3.3 CAPITALIZATION. The authorized capital stock of the Company will,
upon the filing of the Certificate, consist of 48,650,000 shares of Common Stock
(the "COMMON STOCK") and 26,040,155 shares of Preferred Stock (the "PREFERRED
STOCK"), 5,000,000 of which are designated Series A Preferred Stock, 5,776,616
of which are designated Series B Preferred Stock, 4,750,000 of which are
designated Series C Preferred Stock, 4,650,000 of which are designated Series D
Preferred Stock, and 5,863,539 of which are designated Series E Non-Voting
Preferred Stock. As of April 12, 2000, immediately prior to the Closing,
6,346,663 shares of Common Stock will be outstanding, 4,444,545 shares of Series
A Preferred Stock will be outstanding, 26,040,155 shares of Series B Preferred
Stock will be outstanding. The Company has reserved 6,952,250 shares of Common
Stock for issuance upon conversion of the Preferred Stock. The Company has
reserved 1,526,108 shares of Common Stock for issuance to officers, directors,
employees and consultants of the Company pursuant to its 1997 Stock Plan duly
adopted by the Board of Directors and approved by the Company's stockholders
(the "1997 Stock Plan"). Of such reserved shares of Common Stock, options to
purchase 2,543,097 shares have been granted and are currently outstanding and
887,979 shares of Common Stock remain available for issuance pursuant to the
1997 Stock Plan. All of the outstanding shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable, and were issued in compliance with applicable federal and state
securities laws. The Shares when issued pursuant to the terms of this Agreement
and the Warrant Shares, when issued upon exercise of
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the Warrants, will be duly authorized, validly issued, fully paid and
nonassessable and will be free of restrictions on transfer except for such
restrictions as are imposed by law and the Agreements and free of any preemptive
or similar rights other than those arising under the Stockholders' Rights
Agreement between the Company and certain of its investors which rights will
have been waived with respect to the issuance of the Shares. Except those
purchase rights, options and warrants as set forth in Schedule 3.3 of the
Schedule of Exceptions, there are no other options, warrants or other rights
(including conversion or preemptive rights) or agreements outstanding to
purchase any of the Company's authorized and unissued capital stock. To the
Company's knowledge and except as provided in the Certificate, there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
or by a director of the Company.
3.4 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution,
delivery and performance of the Agreements by the Company, the authorization,
sale, issuance and delivery of the Shares and Warrants (and the Series E
Non-Voting Preferred Stock issuable upon the exercise of the Warrants and Common
Stock issuable upon conversion of the Shares and Warrant Shares) and the
performance of all of the Company's obligations under the Agreements has been
taken or will be taken prior to the Closing. The Agreements, when executed and
delivered by the Company, shall constitute valid and binding obligations of the
Company, enforceable in accordance with their terms. The Shares, when issued in
compliance with the provisions of this Agreement will be validly issued, will be
fully paid and nonassessable, and will have the rights, preferences and
privileges described in the Certificate; the Series E Non-Voting Preferred Stock
issuable upon the exercise of the Warrants and Common Stock issuable upon
conversion of the Shares and Warrant Shares has been duly and validly reserved
and, when issued in compliance with the provisions of this Agreement and the
Certificate, will be validly issued, and will be fully paid and nonassessable
and such Series E Non-Voting Preferred Stock will be free of any liens or
encumbrances, assuming the Investors take the shares with no notice thereof,
other than any liens or encumbrances created by or imposed upon the holders
through no action of the Company; provided, however, that the Shares, Warrants
and Warrant Shares (and the Common Stock issuable upon conversion thereof) may
be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein.
3.5 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any term of its Certificate or Bylaws, or in any material respect
of any term or provision of any material mortgage, indebtedness, indenture,
contract, agreement, instrument, judgment, order or decree, and to its knowledge
is not in violation of any statute, rule or regulation applicable to the Company
where such violation would have a material adverse effect on the Company. The
execution, delivery and performance of and compliance with the Agreements, and
the issuance of the Shares and the Common Stock issuable upon conversion of the
Shares, have not resulted in and will not result in any material violation of,
or conflict with, or constitute with or without the passage of time and the
giving of notice a material violation or default under, the Company's
Certificate or Bylaws.
3.6 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale
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or issuance of the Shares and the Warrants (and the Warrant Shares issuable upon
the exercise of the Warrants and Common Stock issuable upon conversion of the
Shares and Warrant Shares), or the consummation of any other transaction
contemplated hereby, except (a) filing of the Certificate in the office of the
Delaware Secretary of State and (b) qualification (or taking such action as may
be necessary to secure an exemption from qualification, if available) of the
offer and sale of the Warrants (and the Common Stock issuable upon the exercise
of the Warrants and Common Stock issuable upon conversion of the Shares and
Warrant Shares) under applicable Blue Sky laws.
3.7 OFFERING. Subject to the accuracy of the Investors' representations
in Section 4 hereof, the offer, sale and issuance of the Shares and the Warrants
to be issued in conformity with the terms of this Agreement, and the issuance of
the Warrant Shares upon exercise of the Warrants and Common Stock to be issued
upon conversion of the Shares and Warrant Shares, constitute transactions exempt
from the registration requirements of Section 5 of the Securities Act of 1933,
as amended (the "SECURITIES ACT") and in compliance with applicable state
securities laws.
3.8 BROKERS OR FINDERS; OTHER OFFERS. The Company has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
3.9 INTELLECTUAL PROPERTY. The Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, tradenames, copyrights,
trade secrets, licenses, information and proprietary rights and processes
necessary for its business as currently conducted without any conflict with, or
infringement of, the rights of others. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses or arrangements of any kind
with respect to the patents, trademarks, service marks, tradenames, copyrights,
trade secrets, licenses, information, proprietary rights and process of any
other person or entity, except, in either case, for standard end-use, object
code, internal use software licenses and support maintenance agreements. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets or other
proprietary rights or processes of any other person or entity. The Company is
not aware that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of such employee's best efforts to promote the
interest of the Company or that would conflict with the Company's business.
Neither the execution or delivery of this Agreement, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as currently conducted, will, 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 such employee is now obligated. The Company does not believe it is or will
be necessary to use any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company. Set
forth in Section 3.9 of the Schedule of Exceptions is a listing of all patents,
trademarks and licenses of the Company.
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3.10 SUBSIDIARIES. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture or
partnership.
3.11 LITIGATION. There is no action, suit, proceeding or, to the
Company's knowledge, investigation pending or, to the Company's knowledge,
currently threatened against the Company that questions the validity of this
Agreement, the Amended and Restated Stockholders' Rights Agreement, attached
hereto as Exhibit D (the "STOCKHOLDERS' RIGHTS AGREEMENT") and of even date
herewith, or the right of the Company to enter into each such agreement, or to
consummate the transactions contemplated hereby or thereby. The Company is not a
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality which prohibits the
transactions contemplated by this Agreement. There is no action, suit or
proceeding by the Company currently pending or which the Company currently
intends to initiate. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened (or any basis therefor)
known to the Company involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employees, or their obligations under any agreements with prior employers.
3.12 RIGHTS OF REGISTRATION. Except as contemplated in the
Stockholders' Rights Agreement, the Company has not granted or agreed to grant
any registration rights, including piggyback rights, to any person or entity.
3.13 CORPORATE DOCUMENTS. The Certificate and Bylaws of the Company are
in substantially the forms attached hereto as Exhibit B and Exhibit E,
respectively.
3.14 EMPLOYEE BENEFIT PLANS. The Company does not have any "employee
benefit" plan as defined in the Employee Retirement Income Security Act of 1974
("ERISA"). The Company is not, nor was it at any time, obligated to contribute
to any employee pension benefit plan which is or was a multi-employer plan as
defined in ERISA.
3.15 TAX RETURNS AND PAYMENTS. The Company has filed all tax returns
and reports as required by law. These returns and reports are true and correct
in all material respects. The Company has paid all taxes and other assessments
due. Except as would not have a material adverse effect on the Company, since
the date of the Financial Statements, the Company has not incurred any taxes,
assessments or governmental charges other than in the ordinary course of
business and the Company has made adequate provisions on its books of account
for all taxes, assessments and governmental charges with respect to its
business, properties and operations for such period. Except as would not have a
material adverse effect on the Company, the Company has withheld or collected
from each payment made to each of its employees, the amount of all taxes
(including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.
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3.16 COMPLIANCE WITH LAWS. The Company has complied with and is not in
violation of any foreign, federal, state or local statute, law or regulation,
the violation of which would have a material adverse effect on the Company.
3.17 TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
material compliance with such leases and holds a valid leasehold interest free
of any liens, claims or encumbrances.
3.18 NO CONFLICT OF INTEREST. Except as set forth on Schedule 3.18, the
Company is not indebted to any of its officers or directors or to their
respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business. None of the Company's officers or directors, or any members of
their immediate families, are indebted to or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated (other than the Company itself) or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company except that officers, directors and/or stockholders of the Company may
own stock in (but not to exceed two (2) percent of the outstanding capital stock
thereof) publicly traded companies that may compete with the Company. No officer
or director or any member of their immediate families is interested in any
material contract with the Company.
3.19 BOOKS AND RECORDS. The Company has made available to the Investors
all corporate and financial books and records of the Company which are current
in all material respects.
3.20 VOTING AGREEMENTS. To the knowledge of the Company, other than the
Stockholders' Rights Agreement, there is no stockholder agreement or voting
agreement or agreement or understanding between any stockholders or any other
persons that grants special rights with respect to any shares of the Company's
capital stock.
3.21 MATERIAL AGREEMENTS. Except as set forth in the Schedule 3.22, the
Company does not have any contract, agreement, lease or commitment, written or
oral, absolute or contingent, other than (i) contracts for the purchase of
supplies or services entered into in the ordinary course of business and that do
not involve more than $15,000 and do not extend for more than one year beyond
the date hereof, (ii) equipment leases entered into in the ordinary course of
business and that do not individually provide for rental payments of more than
$20,000 annually, (iii) contracts terminable by the Company on no more than
sixty days' notice without materially adverse cost or liability to the Company
and (iv) contracts expressly contemplated hereby. The Company has not engaged in
the past three (3) months in any substantive and material discussion (i) with
any representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such corporation or
corporations, (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Company or a transaction or
series of related transactions in which more than fifty percent (50%)
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of the voting power of the Company is disposed of, or (iii) regarding any other
form of acquisition, liquidation, dissolution or winding up of the Company.
3.22 FINANCIAL STATEMENTS. The Company has delivered to each Investor
its unaudited balance sheet as of February 29, 2000 and unaudited statement of
income for the [_____]-month period ending on February 29, 2000 (collectively,
the "Financial Statements"), copies of which are attached hereto as Exhibit F.
The Financial Statements are in accordance with the books and records of the
Company and present fairly the financial condition and position of the Company
as of the statement date, and other dates therein specified; provided, however,
that the unaudited interim financial statements are subject to normal recurring
year-end audit adjustments. The Company has made a good faith effort to prepare
the Financial Statements in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated and
with each other, and the unaudited Financial Statements may not contain all
footnotes required by generally accepted accounting principles. Except as set
forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to February 29, 2000 and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
Financial Statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation. The
Company will make a good faith effort to maintain a standard system of
accounting established and administered in accordance with generally accepted
accounting principles.
3.23 CHANGES. Except as would not have a material adverse effect on the
Company, since February 29, 2000 there has not been:
a. any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
b. any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted);
c. any waiver by the Company of a material debt owed to it;
d. any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted);
e. any material change to the Company in any compensation
arrangement or agreement with any employee;
f. any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
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g. any resignation or termination of employment of any key officer
of the Company; and the Company does not know of the impending resignation or
termination of employment of any such officer;
h. receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
i. any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
j. 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;
k. 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;
l. to the Company's knowledge, any other event or condition of any
character that might materially and adversely affect the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted); or
m. any agreement or commitment by the Company to do any of the
things described in this Section 3.23.
3.24 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each employee,
officer and consultant of the Company has executed a Proprietary Information and
Inventions Agreement substantially in the form previously reviewed by counsel to
the Investors. The Company is not aware that any of its employees or consultants
is in violation thereof and the Company will use its reasonable efforts to
prevent any such violation.
3.25 SECTION 83(b) ELECTIONS. To the Company's knowledge, all election
notices permitted by Section 83(b) of the Internal Revenue Code and any
analogous provisions of applicable state tax laws have been timely filed by all
employees who have purchased shares of the Company's common stock under
agreements that provide for the vesting of such shares.
3.26 DISCLOSURE. The Company has provided the Investors with the
information which the Investors have requested for deciding whether to acquire
the Shares. To the Company's knowledge, no representation or warranty of the
Company contained in this Agreement and the exhibits attached hereto or any
certificate furnished or to be furnished to the Investors at the Closing (when
read together) contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
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3.27 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
3.28 DIVIDENDS. The Company has not declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock.
3.29 LABOR AGREEMENTS. The Company is not bound by or subject to (and
none of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested or, to the knowledge of the Company, has sought
to represent any of the employees, representatives or agents of the Company. The
employment of each officer and employee of the Company is terminable at the will
of the Company. The Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment. The Company is not aware that any executive officer
or key employee intends to terminate their employment with the Company, nor does
the Company have a present intention to terminate the employment of any of the
foregoing. The employment of each officer and employee of the Company is
terminable at the will of the Company. The Company is not a party to or bound by
any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement, or other
employee compensation agreement.
3.30 PERMITS. The Company has all franchises, permits, license and any
similar authority necessary for the conduct of its business, the lack of which
could materially and adversely affect the business, properties, prospects, or
financial condition of the Company. The Company is not in default under any of
such franchises, permits, licenses or other similar authority.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby severally represents and warrants to the
Company with respect to the purchase of the Shares as follows:
4.1 EXPERIENCE. It has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
4.2 INVESTMENT. It is acquiring the Shares and Warrants and the Common
Stock underlying the Shares and Warrant Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof; provided, however, that TCV IV, L.P.
intends to transfer certain of its Shares and Warrants, and all rights therewith
to TCV IV Strategic Partners, L.P., an affiliate of TCV IV, L.P. It understands
that the Shares and Warrants to be purchased and the Common Stock underlying the
Shares have not been, and will not be, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which
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depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of such Investor's representations as expressed herein.
4.3 ACCREDITED INVESTORS. The Investor is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
4.4 RULE 144. It acknowledges that the Shares and Warrants and the
underlying Warrant Shares and Common Stock must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of Shares and
Warrants purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the Shares and Warrants, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations.
4.5 NO PUBLIC MARKET. It understands that no public market now exists
for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
4.6 ACCESS TO DATA. It has had an opportunity to discuss the Company's
business, management and financial affairs with its management. It has also had
an opportunity to ask questions of officers of the Company, which questions were
answered to its satisfaction. It understands that such discussions, as well as
any written information issued by the Company, were intended to describe certain
aspects of the Company's business but were not a thorough or exhaustive
description. The foregoing does not, however, limit or modify the
representations and warranties of the Company in Section III hereof, or the
right of the Investors to rely thereon.
4.7 AUTHORIZATION. This Agreement when executed and delivered by such
Investor will constitute a valid and legally binding obligation of the Investor,
enforceable in accordance with its terms.
4.8 BROKERS OR FINDERS. Each Investor has not, and will not, incur,
directly or indirectly, as a result of any action taken by such Investor, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.
4.9 TAX CONSEQUENCES; LEGAL REPRESENTATION. Each Investor has reviewed
with the Investor's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement (including any tax consequences that may result under recently enacted
tax legislation). Each Investor is relying solely on such advisors and not on
any statements or representations of the Company or any of its agents. Each
Investor understands that the Investor (and not the Company) shall be
responsible for the Investor's own tax liability that may arise as a result of
this investment or the transactions contemplated by this Agreement. Each
Investor understands that the law firm of
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Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx is acting as counsel to the Company in
connection with the transactions contemplated by this Agreement, and is not
acting as counsel for the Investors.
SECTION V
CONDITIONS TO CLOSING OF INVESTORS
Each Investors' obligation to purchase Shares at the Closing is,
at the option of such Investor, subject to the fulfillment of the following
conditions on or before the Closing:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section III hereof shall be true and correct
in all material respects as of the Closing.
5.2 QUALIFICATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall be obtained and effective as of the
Closing.
5.3 OPINION OF COMPANY COUNSEL. The Investors shall have received from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel for the Company, an opinion, dated as
of the Closing, in substantially the form of Exhibit G.
5.4 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. The Company and
each of its employees shall have entered into the Company's standard form
Proprietary Information and Inventions Agreement, in substantially the form
provided to the Investors.
5.5 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing shall
have been performed or complied with.
5.6 BLUE SKY. With respect to the purchase of Shares and Warrants by
such Investor, the Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the offer and sale of the Shares and Warrants and the
Warrant Shares issuable upon the exercise of the Warrants and Common Stock
issuable upon conversion of the Shares and Warrant Shares as contemplated
herein.
5.7 AMENDED AND RESTATED CERTIFICATE. The Certificate shall have been
filed with the Delaware Secretary of State.
5.8 STOCKHOLDERS' RIGHTS AGREEMENT. The Company shall have delivered an
executed copy of the Stockholders' Rights Agreement and shall be bound thereby.
5.9 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Investors a certificate executed by the President of the Company, dated as of
the Closing, and certifying to the fulfillment of the conditions specified in
Sections 5.1 and 5.5 of this Agreement.
11
5.10 DELIVERY OF SHARE CERTIFICATES. The Company shall deliver, and the
Investors shall have received, (i) the share certificate representing each such
Investor's purchase of the Series E Non-Voting Preferred Stock under this
Agreement and (ii) a Warrant representing each such Investor's right to purchase
Warrant Shares to which such Investor is entitled under this Agreement.
5.11 MANAGEMENT RIGHTS AGREEMENTS. The Company shall have delivered an
executed copy of the Management Rights letter in the form of Exhibit H and shall
be bound thereby.
SECTION VI
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue any Shares and Warrants
at the Closing is, at the option of the Company, subject to the fulfillment as
of the Closing of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by each Investor in Section IV hereof shall be true and correct
when made, and shall be true and correct on the date of the Closing.
6.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by each Investor on or prior to the Closing shall
have been performed or complied with in all material respects.
6.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares and
Warrants and the Warrant Shares issuable upon the exercise of the Warrants and
Common Stock issuable upon conversion of the Shares and Warrant Shares as
contemplated herein.
6.4 AMENDED AND RESTATED CERTIFICATE. The Certificate shall have been
filed with the Delaware Secretary of State.
6.5 STOCKHOLDERS' RIGHTS AGREEMENT. Each Investor shall have delivered
an executed copy of the Stockholders' Rights Agreement and shall be bound
thereby.
SECTION VII
AFFIRMATIVE COVENANTS OF THE COMPANY
7.1 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. The Company
hereby agrees to enter into the Company's standard form Proprietary Information
and Inventions Agreement with each employee and consultant it hires hereafter.
7.2 1997 STOCK PLAN.
12
a. Except as otherwise determined by the Board of Directors:
(i) twenty-five percent (25%) of such shares issued under the
1997 Stock Plan shall vest on the first anniversary of the vesting commencement
date and the remainder shall vest at one forty-eighth (1/48) per month
thereafter;
(ii) such shares issued under the Stock Plan may not be
transferred prior to vesting;
(iii) in the event that an employee is terminated by the
Company, the Company shall have a right to repurchase at cost any unvested
shares of Common Stock issued under the 1997 Stock Plan held by such employee;
(iv) such shares issued under the 1997 Stock Plan shall not be
transferable for one hundred and eighty (180) days following the effective date
of an Initial Public Offering; and
(v) in the event of a Change of Control as defined in the
Certificate of the Company and the termination of an employee without cause, the
vesting on those shares issued under the 1997 Stock Plan held by such employee
shall accelerate by twelve (12) months.
SECTION VIII
MISCELLANEOUS
8.1 SURVIVAL OF WARRANTIES. The representations and warranties of the
Company and the Investors contained in and made pursuant to this Agreement shall
survive for a period of two (2) years after the execution and delivery of this
Agreement.
8.2 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of California as applied to agreements entered
into among California residents to be performed entirely within California. The
parties hereto hereby submit to the exclusive jurisdiction and venue of the
United States District Court for the Northern District of California.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of an Investor to purchase Shares shall not
be assignable without the consent of the Company.
8.4 ENTIRE AGREEMENT; AMENDMENT. The Agreements and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of 75% of the Common Stock issued or issuable
upon conversion of the Shares may, with the
13
Company's prior written consent, waive, modify or amend on behalf of all
Investors, any provision hereof.
8.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
overnight courier or by facsimile upon proper confirmation of receipt, addressed
(a) if to an Investor, at such Investor's address or addresses set forth in
Exhibit A, or at such other address as such Investor shall have furnished to the
Company in writing, or (b) if to any other holder of any Shares, at such address
as such holder shall have furnished the Company in writing, or, until any such
holder so furnishes an address to the Company, then to and at the address of the
last holder of such Shares who has so furnished an address to the Company, or
(c) if to the Company, one copy should be sent to such address as the Company
shall have furnished to the Investors.
Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or
seventy-two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
8.6 EXPENSES. If the Closing is effected, the Company agrees to pay an
amount not to exceed $15,000 for fees of outside legal counsel to the Investors
arising in connection with the negotiation, execution and consummation of the
transactions contemplated by this Agreement. The Company shall not be
responsible for any other fees and expenses of the Investors, whether incurred
pursuant to the negotiation, execution and consummation of the transactions
contemplated by this Agreement or otherwise. In the event that the financing
does not close, the Company and each Investor shall bear its own legal and other
expenses incurred to date with respect to the transactions contemplated by this
Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Investors,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one and the same
instrument.
8.8 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
8.9 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement shall impair any such
right, power or remedy of such party nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing
14
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party shall be cumulative and not alternative.
8.10 FURTHER ASSURANCES. Each party hereto agrees to take such further
actions including the execution of such documents as may be necessary or
desirable, or reasonably requested by the other, in order to carry out the
purposes of this Agreement.
8.11 FINDER'S FEE. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. The Company agrees to indemnify and hold harmless each Investor for
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
8.12 LEGAL FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
[Remainder of Page Intentionally Left Blank]
15
IN WITNESS WHEREOF, the parties have executed this Series E
Preferred Stock Purchase Agreement on the day and year first set forth above.
"COMPANY"
XXXXXXX.XXX, INC.
a Delaware corporation
By: /s/
-----------------------------------
Xxxx Xxxxxxxx
Chief Executive Officer
"INVESTORS"
FOUNDATION CAPITAL II, L.P.
By: Foundation Capital Management II, LLC
Its: Manager
By: /s/
--------------------------------------
Name:
Title:
FOUNDATION CAPITAL II ENTREPRENEURS FUND, LLC
By: Foundation Capital Management II, LLC
Its: Manager
By: /s/
--------------------------------------
Name:
Title:
[Signature Page to XxxXxxx.xxx, Inc.
Series E Non-Voting Stock Purchase Agreement]
FOUNDATION CAPITAL II PRINCIPALS FUND, LLC
By: Foundation Capital Management II, LLC
Its: Manager
By: /s/
--------------------------------------
Name:
Title:
TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TCV II (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
[Signature Page to XxxXxxx.xxx, Inc.
Series E Non-Voting Stock Purchase Agreement]
TCV II STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
INSTITUTIONAL VENTURE PARTNERS VIII, L.P.
By: Institutional Venture Management VIII, LLC
Its: General Partner
By: /s/
--------------------------------------
Name:
Title: Managing Director
IVM INVESTMENT FUND VIII, LLC
By: Institutional Venture Management VIII, LLC
Its: General Partner
By: /s/
--------------------------------------
Name:
Title: Managing Director
XXXX XXXXXXX
[Signature Page to XxxXxxx.xxx, Inc.
Series E Non-Voting Stock Purchase Agreement]
