SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement (the
"AGREEMENT") is made as of January 1, 1999, by and between NetZero, Inc., a
California corporation (the "COMPANY"), and Xxxxx X. Xxxxxxx Living Trust Dtd
11/22/96 ("PURCHASER").
WHEREAS, Purchaser wishes to purchase shares of Series B
Preferred Stock of the Company upon the terms and subject to the conditions
of this Agreement.
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:
I. PURCHASE OF SHARES
1.1 PRICE. Purchaser hereby agrees to purchase 67,507
shares of Series B Preferred Stock of the Company (the "Shares") at a price
of $0.2222 per Share. The aggregate purchase price for the Shares shall be
$15,000.01.
1.2 FORM OF PAYMENT. Purchaser shall pay the purchase price
for the Shares by delivering good funds in United States dollars to the
Company. Such delivery of funds shall be made against delivery by the Company
of a certificate for the Shares.
1.3 RIGHT, PREFERENCES AND PRIVILEGES. The Series B
Preferred Stock of the Company shall have the rights, preferences and
privileges set forth in the Company's Amended and Restated Articles of
Incorporation filed with the Secretary of the State of California on
September 3, 1998.
II. SECURITIES LAW COMPLIANCE
2.1 EXEMPTION FROM REGISTRATION. Purchaser acknowledges
that the Shares are not being registered under the Securities Act of 1933, as
amended (the "1933 ACT"), based, in part, on reliance that the issuance of
the Shares is exempt from registration under Section 4(2) of the 1933 Act as
not involving any public offering. Purchaser further acknowledges that the
Company's reliance on such exemption is predicated, in part, on the
representations set forth below made by Purchaser to the Company:
(a) Purchaser is acquiring the Shares solely for his
own account, for investment purposes only, and not with an intent to sell, or
for resale in connection with any distribution of all or any portion of the
Shares within the meaning of the 1933 Act;
(b) Purchaser is an "Accredited Investor" as that term
is defined in Rule 501 of the General Rules and Regulations under the
Securities Act of 1933;
(c) In evaluating the merits and risks of an
investment in the Shares, Purchaser has relied upon the advice of Purchaser's
legal counsel, tax advisors, and/or other investment advisors;
(d) Purchaser is experienced in evaluating and
investing in companies such as the Company. In addition, Purchaser has a
preexisting business relationship with the Company. Purchaser has been given
access to all books, records and other information of the Company which
Purchaser has desired to review and analyze in connection with Purchaser's
purchase of the Shares hereunder;
(e) Purchaser is aware that an investment in
securities of a closely held corporation such as the Company is
non-marketable, non-transferable and will require Purchaser's capital to be
invested for an indefinite period of time, possibly without return. Purchaser
has no need for liquidity in this investment, has the ability to bear the
economic risk of this investment, and can afford a complete loss of the
entire purchase price paid for the Shares;
(f) Purchaser understands that the Shares being
purchased hereunder are characterized as "restricted securities" under the
federal securities laws since the Shares are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration
under the 1933 Act only in certain limited circumstances. Purchaser
understands that the Company has no obligation to file a registration
statement under the 1933 Act for the Shares or to otherwise assist Purchaser
in complying with any exemption from registration. Purchaser represents that
Purchaser is familiar with Rule 144 promulgated under the 1933 Act, as
presently in effect, and understands the resale limitations imposed thereby
and by the 1933 Act; and
(g) At no time was an oral representation made to
Purchaser relating to the purchase of the Shares or was Purchaser presented
with or solicited by any leaflet, public or promotional material, newspaper
or magazine article, radio or television advertisement or any other form of
general advertising relating to the purchase hereunder.
2.2 DISPOSITION OF SHARES. Purchaser hereby agrees that
Purchaser shall make no disposition of the Shares unless and until:
(a) Purchaser shall have notified the Company of the
proposed disposition and provided a written summary in reasonable detail of
the terms and conditions of the proposed disposition;
(b) Purchaser shall have complied with all
requirements of this Agreement applicable to the disposition of the Shares;
(c) Purchaser shall have provided the Company with
reasonable written assurances, in form and substance satisfactory to the
Company, that (i) the proposed disposition does not require registration or
qualification of the Shares under the 1933 Act or any state securities laws
or (ii) all appropriate action necessary for compliance with the registration
requirements of the 1933 Act or any state securities laws or of any exemption
from registration available under the 1933 Act (including Rule 144) or any
state securities laws has been taken; and
(d) Purchaser shall have provided the Company with
reasonable written assurances, in form and substance satisfactory to the
Company, that the proposed
disposition will not result in the contravention of any transfer restrictions
applicable to the Shares.
The Company shall NOT be required (i) to transfer on its
books any Shares which have been sold or transferred in violation of the
provisions of this Article II NOR (ii) to treat as the owner of the Shares,
or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Shares have been transferred in contravention of this
Agreement.
2.3 RESTRICTIVE LEGENDS. In order to reflect the
restrictions on disposition of the Shares, the stock certificates for the
Shares will be endorsed with restrictive legends, including the following
legends:
(i) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES OR THE ISSUER RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(ii) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS OF AN INVESTOR'S RIGHTS AGREEMENT AMONG
THE ISSUER, THE HOLDER OF THE SECURITIES EVIDENCED HEREBY (OR SUCH HOLDER'S
PREDECESSOR IN INTEREST) AND CERTAIN OTHER SHAREHOLDERS WHICH MAY RESTRICT
THE DISPOSITION OF SUCH SHARES FOLLOWING A PUBLIC OFFERING OF THE COMPANY'S
SECURITIES."
(iii) Any legends required by state securities laws.
III. GENERAL PROVISIONS.
3.1 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Agreement shall confer upon Purchaser any right to continue in the service of
the Company (or any parent or subsidiary corporation of the Company employing
or retaining Purchaser) for any period of specific duration or interfere with
or restrict in any way the rights of the Company (or any parent or subsidiary
corporation of the Company employing or retaining Purchaser) or Purchaser,
which rights are hereby expressly reserved by each, to terminate the Employee
status of Purchaser at any time for any reason whatsoever, with or without
cause.
3.2 NOTICES. Any notice required hereunder shall be given
in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States mail, registered or certified, postage prepaid
and addressed to the party entitled to such notice at the address indicated
below such party's signature line on this Agreement or at such other address
as such party may designate by ten days advance written notice under this
Section 3.2 to all other parties to this Agreement.
3.3 NO WAIVER. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
3.4 PURCHASER UNDERTAKING. Purchaser hereby agrees to take
whatever additional action and execute whatever additional documents the
Company may in its judgment deem necessary or advisable in order to carry out
or effect one or more of the obligations or restrictions imposed on either
Purchaser or the Shares pursuant to the express provisions of this Agreement.
3.6 AGREEMENT IS ENTIRE CONTRACT. This Agreement
constitutes the entire contract between the parties hereto with regard to the
subject matter hereof.
3.7 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such
laws are applied to contracts entered into and performed in such state
without resort to that state's conflict-of-laws rules.
3.8 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
3.9 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Company and
its successors and assigns and Purchaser and Purchaser's legal
representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, whether or not any such person shall have become a party to
this Agreement and have agreed in writing to join herein and be bound by the
terms and conditions hereof.
3.10 RIGHT TO SPECIFIC PERFORMANCE. Purchaser agrees that
the Company shall be entitled to a decree of specific performance of the
terms hereof or an injunction restraining violation of this Agreement, said
right to be in addition to any other remedies available to the Company.
3.11 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Series B
Preferred Stock Purchase Agreement as of the date first written above.
COMPANY:
NETZERO, INC.
a California corporation
/s/ XXXXXX X. XXXX
----------------------------
By: Xxxxxx X. Xxxx
Its Chief Executive Officer
PURCHASER:
/s/ XXXXX X. XXXXXXX
----------------------------
By: Xxxxx X. Xxxxxxx, as Trustee of
Xxxxx X. Xxxxxxx Living Trust Dtd
11/22/96
