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EXHIBIT 10.19
XXX.XXX, INC.
SERIES D PREFERRED STOCK
PURCHASE AGREEMENT
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TABLE OF CONTENTS
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SECTION 1. AGREEMENT TO SELL AND PURCHASE........................................................................1
1.1 AUTHORIZATION OF SHARES..................................................................................1
1.2 SALE AND PURCHASE........................................................................................1
SECTION 2. CLOSING, DELIVERY AND PAYMENT.........................................................................2
2.1 CLOSING..................................................................................................2
2.2 DELIVERY.................................................................................................2
2.3 SUBSEQUENT SALES OF SHARES...............................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................2
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION............................................................2
3.2 SUBSIDIARIES.............................................................................................2
3.3 AUTHORIZATION............................................................................................3
3.4 VALID ISSUANCE OF SHARES.................................................................................3
3.5 GOVERNMENTAL CONSENTS....................................................................................3
3.6 NO VIOLATION.............................................................................................3
3.7 CAPITALIZATION...........................................................................................4
3.8 LITIGATION...............................................................................................4
3.9 NO DEFAULT...............................................................................................5
3.10 EMPLOYEES................................................................................................5
3.11 PATENTS AND TRADEMARKS...................................................................................5
3.12 TRANSACTIONS WITH STOCKHOLDERS, ETC......................................................................6
3.13 REGISTRATION RIGHTS......................................................................................6
3.14 COMPLIANCE WITH LAWS.....................................................................................6
3.15 MATERIAL CONTRACTS.......................................................................................7
3.16 PROPERTIES, ASSETS.......................................................................................8
3.17 ENVIRONMENTAL AND SAFETY LAWS............................................................................8
3.18 FINANCIAL STATEMENTS.....................................................................................8
3.19 TAX RETURNS AND AUDITS...................................................................................8
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TABLE OF CONTENTS
(CONTINUED)
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3.20 BROKERS OR FINDERS..................................................................................... 9
3.21 MINUTE BOOKS........................................................................................... 9
3.22 OFFERING VALID......................................................................................... 9
3.23 REAL PROPERTY HOLDING CORPORATION...................................................................... 9
3.24 ERISA.................................................................................................. 9
3.25 INSURANCE.............................................................................................. 9
3.26 DISCLOSURE............................................................................................. 9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.................................................... 10
4.1 AUTHORIZATION.......................................................................................... 10
4.2 CONSENTS............................................................................................... 10
4.3 INVESTMENT REPRESENTATIONS............................................................................. 10
4.4 TRANSFER RESTRICTIONS.................................................................................. 11
SECTION 5. CONDITIONS TO CLOSING............................................................................... 11
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING................................................... 11
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY............................................................... 13
SECTION 6. MISCELLANEOUS....................................................................................... 13
6.1 GOVERNING LAW.......................................................................................... 13
6.2 SURVIVAL............................................................................................... 13
6.3 SUCCESSORS AND ASSIGNS................................................................................. 14
6.4 ENTIRE AGREEMENT....................................................................................... 14
6.5 SEVERABILITY........................................................................................... 14
6.6 AMENDMENT AND WAIVER................................................................................... 14
6.7 DELAYS OR OMISSIONS.................................................................................... 14
6.8 NOTICES................................................................................................ 14
6.9 ATTORNEYS' FEES........................................................................................ 15
6.10 TITLES AND SUBTITLES................................................................................... 15
6.11 COUNTERPARTS........................................................................................... 15
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TABLE OF CONTENTS
(CONTINUED)
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6.12 BROKER'S FEES.......................................................................................... 15
6.13 SPECIFIC PERFORMANCE................................................................................... 15
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XXX.XXX, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of August 12, 1998, by and among XXX.XXX, INC., a Delaware
corporation (the "Company") and each of those persons and entities, severally
and not jointly, whose names are set forth on the Schedule of Purchasers
attached hereto as Exhibit A (which persons and entities are hereinafter
collectively referred to as "Purchasers" and each individually as a
"Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of up to an
aggregate of two million thirty-three thousand eight hundred ninety-eight
(2,033,898) shares of its Series D Preferred Stock (the "Shares");
WHEREAS, the Purchasers desire to purchase the Shares on the terms and
conditions set forth herein;
WHEREAS, the Company desires to issue and sell the Shares to the
Purchasers on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
the Purchasers of the Shares and (ii) the issuance of such shares of Common
Stock to be issued upon conversion of the Shares (the "Conversion Shares"). The
Shares and the Conversion Shares shall have the rights, preferences, privileges
and restrictions set forth in the Restated Certificate of Incorporation of the
Company, as amended, in the form attached hereto as Exhibit B (the "Restated
Certificate").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the Closing, the Company hereby agrees to issue and sell to each Purchaser and
each Purchaser agrees to purchase from the Company, the number of Shares set
forth opposite such Purchaser's name on Exhibit A, at a purchase price of
Fourteen Dollars Seventy-Five Cents ($14.75) per share.
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SECTION 2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place at 1:00 p.m. on the date hereof,
at the offices of Xxxxxx Godward LLP, 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000-0000, or at such other time or place as the Company and a
majority of the Purchasers may mutually agree.
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers certificates representing the
number of Shares to be purchased at the Closing by each Purchaser, against
payment of the purchase price therefor by check or wire transfer made payable to
the order of the Company.
2.3 SUBSEQUENT SALES OF SHARES. At any time on or before the 90th day
following the Closing, the Company may sell up to the balance of the authorized
shares of Series D Preferred Stock not sold at the Closing to such persons as
may be approved by the Board of Directors of the Company. All such sales shall
be made on the terms and conditions set forth in this Agreement, including,
without limitation, the representations and warranties by such Purchasers as set
forth in Section 4. Any shares of Series D Preferred Stock sold pursuant to this
Section 2.3 shall be deemed to be "Shares" for all purposes under this Agreement
and any purchasers thereof shall be deemed to be "Purchasers" for all purposes
under this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser as follows, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit C (the "Schedule of
Exceptions") which exceptions shall be deemed to be representations and
warranties as if made hereunder.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own its property, to carry on its business as presently conducted and to enter
into and carry out the transactions contemplated by this Agreement and the
Second Amended and Restated Investor Rights Agreement attached hereto as Exhibit
D (the "Investor Rights Agreement"). The Company is duly qualified to transact
business and is in good standing under the laws of the State of Colorado and all
other jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business. The Company has all necessary governmental
authorizations to own or lease its properties and assets and to carry on its
business as now being conducted.
3.2 SUBSIDIARIES. The Company does not presently 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,
partnership or similar arrangement.
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3.3 AUTHORIZATION. All corporate action on the part of the Company, its
officers and directors necessary for the authorization, execution and delivery
of this Agreement and the Investor Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Shares and the
Conversion Shares has been taken, and this Agreement and the Investor Rights
Agreement constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, (iii) to the extent the
indemnification provisions contained in Section 2.9 of the Investor Rights
Agreement may be limited by applicable federal or state securities laws and (iv)
except to the extent that the amount of attorneys' fees recoverable in any
lawsuit is subject to the supervisory powers and discretion of the court.
3.4 VALID ISSUANCE OF SHARES. The Shares, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
referred to herein will be duly authorized and validly issued, fully paid and
nonassessable, and the Purchasers will have acquired good and marketable title
to such securities, free and clear of any claims, liens, restrictions on
transfer or voting or encumbrances except that such shares may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein, in the Investor Rights Agreement or as otherwise may be required by such
laws at the time a transfer is proposed. The Conversion Shares have been duly
reserved for issuance, and when issued in accordance with the terms of the
Restated Certificate, will be validly issued, fully paid and nonassessable, and
the holders thereof will have acquired good and marketable title to such
securities, free and clear of any claims, liens, restrictions or transfer or
voting or encumbrances except that such shares may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein, in the
Investor Rights Agreement or as otherwise may be required by such laws at the
time a transfer is proposed.
3.5 GOVERNMENTAL CONSENTS. Other than the filing of the Restated
Certificate, no consents, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of the Company is required in
connection with the offer, sale or issuance of the Shares and the Conversion
Shares or the consummation of any other transaction contemplated hereby.
3.6 NO VIOLATION. The execution, delivery and performance of this
Agreement and the Investor Rights Agreement do not and will not, with or without
the passage of time or the giving of notice or both (a) violate any provision of
law, statute, rule or regulation applicable to the Company or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body by which the Company is bound or (b) conflict with or
result in any material breach of the terms of or constitute a material default
(or give any rise to any right of termination, cancellation or acceleration)
under, or result in a right of termination or acceleration under, or the
creation of any lien, claim or encumbrance upon any of the properties or assets
of the Company under (i) its Restated Certificate or
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Bylaws or (ii) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other material instrument or obligation to which
the Company is a party or by which the Company or its assets may be bound.
3.7 CAPITALIZATION. Immediately prior to the Closing, the Company's
authorized capital stock will consist of (x) 16,655,988 shares of Common Stock,
539,710 shares of which are issued and outstanding and (y) 6,222,726 shares of
Preferred Stock, (i) 1,100,000 of which are designated Series A Preferred Stock,
1,062,231 shares of which are issued and outstanding, (ii) 1,055,158 of which
are designated Series B Preferred Stock, 883,652 of which are issued and
outstanding, (iii) 2,033,670 of which are designated Series C Preferred Stock,
all of which are issued and outstanding and (iv) 2,033,898 of which are
designated Series D Preferred Stock, none of which are issued and outstanding.
All issued and outstanding shares of Common Stock and Preferred Stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, are owned by the stockholders and in the numbers specified on
Exhibit E attached hereto and were issued in compliance with all applicable
state and federal securities laws concerning the issuance of securities. The
rights, preferences and privileges of each series of Preferred Stock are as set
forth in the Restated Certificate. Except for (i) an aggregate of 1,244,513
shares of Common Stock that have been reserved for issuance under the Company's
1997 Stock Option Plan, 533,763 shares of which remain available for grant, (ii)
a warrant to be issued to BT Alex. Xxxxx Incorporated pursuant to this
transaction to purchase Common Stock of the Company, (iii) conversion rights of
holders of the Company's Preferred Stock and (iv) except as may be granted
pursuant to this Agreement or the Investor Rights Agreement, there are not
outstanding any options, warrants, rights (including conversion or preemptive
rights), commitments, or agreements for the purchase or acquisition from the
Company of any shares of its capital stock or other securities. The Company is
not obligated to redeem any of its outstanding securities, except as may be
required under the Investor Rights Agreement. The Company is not a party or
subject to any agreement or understanding, and, to the Company's knowledge
without investigation, there is no agreement or understanding between any
Persons which affects or relates to the voting or giving of written consents
with respect to any security or any director of the Company.
3.8 LITIGATION. There is no action, suit or proceeding pending against,
or to the best of the Company's knowledge, currently threatened before any
court, administrative agency or other governmental body against the Company
which questions the validity of this Agreement or the Investor Rights Agreement,
or the right of the Company to enter into any of such Agreements, or to
consummate the transactions contemplated hereby or thereby, or which could
result either individually or in the aggregate, in any material adverse change
in the condition (financial or otherwise), business, property, assets or
liabilities of the Company, nor is the Company aware that there is any valid
basis for the foregoing. 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
employers, or their obligations under any agreements with prior employers. The
Company is not a party or
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subject to, and none of its assets is bound by, the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit or proceeding by the Company currently
pending or which the Company presently intends to initiate.
3.9 NO DEFAULT. The Company is not in violation or default under any
provision of its Restated Certificate or its Bylaws, each as in effect at the
Closing. The Company is not in violation or default of any provision of any
instrument, mortgage, deed of trust, loan, contract, commitment, judgment,
decree, order or obligation to which it is a party or by which it or any of its
properties or assets are bound which would materially adversely affect the
condition (financial or otherwise), business, property, assets or liabilities of
the Company, or any material note, indenture, mortgage, lease, agreement,
contract, purchase order or other material obligation. There exists no
condition, event or act which after notice, lapse of time, or both, is
reasonably likely to constitute a material default by the Company under any of
the foregoing.
3.10 EMPLOYEES. The Company does not employ anyone to perform services
for the Company except in the capacity of an employee or consultant. Each
employee of and consultant to the Company has executed a Proprietary Information
and Inventions Agreement in substantially the form attached hereto as Exhibit F.
To the best knowledge of the Company, no officer or employee is in violation of
such Proprietary Information and Inventions Agreement. 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 or arrangement or
with any collective bargaining agent. No employees of the Company are
represented by any labor union or covered by any collective bargaining
agreement. There is no pending or, to the best of the Company's knowledge,
threatened labor dispute involving the Company and any group of its employees.
The Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with the Company. The
employment of each officer and employee of the Company is terminable at the will
of the Company. The Company has not received any notice from any third party
alleging that any employee of, or consultant to, the Company is in violation of
any term of any employment agreement or other agreement relating to the right of
such person to be employed by, or to contract with, the Company. Neither the
Company nor any employee is a party to, or is bound by, any agreement which
would limit in any material respect: (a) any employee's ability to perform his
obligations as a full time employee of the Company; or (b) the Company's or any
employee's ability or authority to engage in any and all lines of business in
which the Company currently engages or proposes to engage as set forth in its
current business plan.
3.11 PATENTS AND TRADEMARKS. The Schedule of Exceptions contains a
complete list of patents and pending patent applications and trademarks of the
Company. The Company has sufficient title and ownership of all patents,
trademarks, service marks, trade names, copyrights, trade secrets, information,
domain names (as registered with InterNIC), proprietary rights and processes
necessary for its business as now conducted and as proposed to be conducted and
has unrestricted right to use the foregoing without the payment of any
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royalty. To the best of the Company's knowledge, all of the existing patents and
trademarks of the Company are valid and all of the pending and proposed patent
applications and applications for registration of trademarks of the Company will
result in the valid issuance of patents or registration of trademarks. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. Neither the execution
nor delivery of this Agreement or the Related Agreements, nor the carrying on of
the Company's business as currently proposed to be conducted, will, to the best
of the Company's knowledge, conflict with or result in a material breach of the
terms, conditions or provisions of, constitute a material default under, any
material contract, covenant or instrument under which the Company is bound. To
the best of the Company's knowledge, no employee of the Company is in violation
of any terms of any employee contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of such employee with the
Company because of the nature of the business conducted or to be conducted by
the Company.
3.12 TRANSACTIONS WITH STOCKHOLDERS, ETC. No stockholder, employee,
officer or director of the Company or member of his or her immediate family, is
indebted to the Company, nor is the Company indebted (or committed to make loans
or extend or guarantee credit) to any of them. To the best of the Company's
knowledge, no employee or officer, or director who is an employee, of the
Company has any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees or officers, or directors who are employees, of the Company and
members of their immediate families may own less than five percent (5%) of the
stock in publicly traded companies that may compete with the Company. No member
of the immediate family of any officer, or of any director who is an employee,
of the Company is directly or indirectly interested in any material contract
with the Company.
3.13 REGISTRATION RIGHTS. The Company is not under any contractual
obligation to register any of its presently outstanding securities or any of its
securities which may hereafter be issued under any securities laws of any
jurisdiction except as set forth in the Investor Rights Agreement.
3.14 COMPLIANCE WITH LAWS. The Company has at all times conducted and
is now conducting its business in compliance with all laws, rules and
regulations applicable to it. The Company has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses or similar authority.
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3.15 MATERIAL CONTRACTS
(a) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers or directors who are employees of the Company,
affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of $100,000,
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company (other than licenses arising from the purchase of
"off the shelf" or other standard products), or (iii) provisions restricting or
affecting the development, manufacture or distribution of the Company's products
or services, or (iv) indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase or sale agreements entered into in the ordinary course of
business).
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $100,000 or, in the case of
indebtedness and/or liabilities individually less than $100,000, in excess of
$250,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) 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.
(d) For the purposes of subsections (b) and (c) above, 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 of
such subsections.
(e) The Schedule of Exceptions contains a true and complete
list of all Material Contracts (as defined below) in effect on the date hereof.
Each Material Contract is in full force and effect and is a valid and binding
obligation of the Company, enforceable against it in accordance with its terms.
Neither the Company nor to the Company's knowledge, any other party to any such
contract is in default of any provision thereof. "Material Contract" means any
agreement to which the Company is a party, and which involves or relates to (A)
any current or future employment or consulting arrangement; (B) any labor union
or collective bargaining agreement; (C) any indebtedness for borrowed money or
other loan or financing arrangement or any liability on any other debt or other
obligation; (D) any agreement to which any governmental authority is a party;
(E) any transaction not in the ordinary course of business; (F) any agreement
involving prospective obligations or the right to receive in the aggregate in
excess of $100,000; (G) any agreement with the stockholders (other than the
Investor Rights Agreement); or (H) any mortgage, pledge, security
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agreement, financing statement or other document granting a lien, claim or
encumbrance on any of the Company's properties or assets.
(f) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate or its Bylaws that adversely affects its business as now
conducted or as proposed to be conducted, its properties or its financial
condition.
3.16 PROPERTIES, 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 compliance
with such leases, and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
3.17 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
3.18 FINANCIAL STATEMENTS. The Company has delivered to each Purchaser
(i) its audited financial statements for the years ended December 31, 1997 and
1996 and (ii) its unaudited balance sheets, statements of operations and
statements of cash flows for the three months ended March 31, 1997 and 1998
(collectively, the "Financial Statements"). The Financial Statements, together
with the notes thereto, are complete and correct in all material respects, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated, except as
disclosed therein, and present fairly the financial condition and position of
the Company as of the dates, and for the periods, indicated therein, provided,
however, that the interim financial statements are subject to normal year-end
audit adjustments (which are not expected to be material), and do not contain
all footnotes required under generally accepted accounting principles.
3.19 TAX RETURNS AND AUDITS. The Company has accurately prepared all
United States income tax returns and all state and municipal tax returns
required to be filed by it, if any, has paid all taxes, assessments, fees and
charges when and as due under such returns and has made adequate provision for
the payment of all other taxes, assessments, fees and charges shown on such
returns or on assessments received by the Company. To the best of the Company's
knowledge, no deficiency assessment or proposed adjustment of the Company's
United States income tax or state or municipal taxes is pending.
3.20 BROKERS OR FINDERS. The Company has not agreed to incur, directly
or indirectly, any liability for brokerage or finders' fees, agents' commissions
or other similar charges in connection with this Agreement or any of the
transactions contemplated hereby.
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3.21 MINUTE BOOKS. The minute books of the Company provided to special
counsel to BT Alex. Xxxxx Incorporated, as placement agent for the sale of the
Shares hereunder, contain a complete summary of all meetings of directors and
stockholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.
3.22 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the offer, sale and
issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act.
3.23 REAL PROPERTY HOLDING CORPORATION. The Company is not a real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
3.24 ERISA. The Company has complied in all material respects with the
applicable rules of the Employee Retirement Income Security Act of 1974, as
amended, with respect to any employee benefit plans subject thereto.
3.25 INSURANCE. The Company has fire and casualty insurance policies
and other insurance coverage customary for companies similarly situated to the
Company.
3.26 DISCLOSURE. No representation, warranty or statement by the
Company in this Agreement, any Schedule or Exhibit hereto or in any written
statement or certificate furnished to the Purchasers pursuant to this Agreement
or the transactions contemplated hereby, contains any untrue statement of a
material fact or, when taken together, omit to state a material fact necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. However, as to any projections furnished to the
Purchasers, such projections were prepared in good faith by the Company, but the
Company makes no representation or warranty that it will be able to achieve such
projections.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby severally represents and warrants to the Company
as follows:
4.1 AUTHORIZATION. The Agreement and the Investor Rights Agreement
constitute and will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies, (iii) to the extent
the
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indemnification provisions of Section 2.9 of the Investor Rights Agreement may
be limited by applicable federal or state securities laws and (iv) except to the
extent that the amount of attorneys' fees recoverable in any lawsuit is subject
to the supervisory powers and discretion of the court.
4.2 CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental or banking authority on the part of Purchaser required in
connection with the consummation of the transactions contemplated in the
Agreement and the Investor Rights Agreement have been or shall have been
obtained prior to and be effective as of the Closing.
4.3 INVESTMENT REPRESENTATIONS. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in this Agreement. Purchaser hereby
represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser 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. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or the Conversion Shares under the circumstances, in the amounts
or at the times Purchaser might propose.
(b) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents
that by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement and the Investor Rights Agreement.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
(c) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(d) INVESTMENT. Purchaser is acquiring the Shares (or any of
the Common Stock into which the Shares are convertible) for investment for its
own account and not with a view to, or for resale in connection with, any
distribution thereof, and Purchaser has no present intention of selling or
distributing the Shares (or any of the Common Stock into which the Shares are
convertible). Purchaser understands that the Shares (and the Common Stock into
which the Shares are convertible) to be purchased by it have not been registered
under the Securities Act
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which depends upon, among other things, the bona fide nature of the investment
intent as expressed herein.
(e) COMPANY INFORMATION. Purchaser has received and read the
Financial Statements and has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. Purchaser has also had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment.
(f) RESTRICTED SECURITIES. Purchaser acknowledges and agrees
that the Shares and the Conversion Shares must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: 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 through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934) and the number of shares
being sold during any three-month period not exceeding specified limitations.
4.4 TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees that
the Shares and the Conversion Shares are subject to restrictions on transfer as
set forth in the Investor Rights Agreement.
SECTION 5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing with
the same force and effect as if they had been made as of the Closing, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
(b) LEGAL INVESTMENT. At the Closing, the sale and issuance of
the Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which the Purchasers and the Company
are subject, and no action shall be pending seeking to prevent such sale and
issuance.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation
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of the transactions contemplated by the Agreement and the Investor Rights
Agreement, (except for such as may be properly obtained subsequent to the
Closing).
(d) RESTATED CERTIFICATE. The Restated Certificate shall read
in its entirety as set forth in Exhibit B and shall have been filed with the
Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to
the Purchasers or their counsel, copies of all corporate documents of the
Company as the Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares
issuable upon conversion of the Shares shall have been duly authorized and
reserved for issuance upon such conversion.
(g) COMPLIANCE CERTIFICATE. The Company shall have delivered
to Purchaser a Compliance Certificate, executed by the President of the Company,
dated the date of the Closing, stating that the conditions specified in
subsection (a) of this Section 5.1 have been satisfied.
(h) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit D shall have been executed
and delivered by the parties thereto.
(i) LEGAL OPINION. The Purchaser shall have received from
legal counsel to the Company an opinion addressed to it, dated as of the
Closing, in substantially the form attached hereto as Exhibit G.
(j) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchasers and their
special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(k) NO MATERIAL ADVERSE CHANGE. Since the date of this
Agreement, no event shall have occurred which has had a material adverse effect
on the Company's business, results of operations or financial condition.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at the Closing is subject to the satisfaction, on
or prior to each such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by the Purchasers in Section 4 hereof shall be true and
correct in all material
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respects at the date of the Closing, with the same force and effect as if they
had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. The Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by the Purchaser on or before the Closing.
(c) FILING OF RESTATED CERTIFICATE. The Restated Certificate
shall have been filed with the Secretary of State of the State of Delaware.
(d) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit D shall have been executed
and delivered by the parties thereto.
(e) ESCROW AGREEMENT. An Escrow Agreement substantially in the
form attached hereto as Exhibit H shall have been executed and delivered by the
Purchasers.
(f) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Investor
Rights Agreement (except for such as may be properly obtained subsequent to the
Closing).
SECTION 6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Colorado without giving effect to conflict of law
principles, with the exception that matters of corporate law shall be governed
by the laws of the State of Delaware.
6.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchasers and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
6.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Investor Rights Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein.
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6.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified
only upon the written consent of the Company and a majority in interest of the
Purchasers and the obligations of the Company and the rights of the Purchasers
under the Agreement may be waived only with the written consent of the Company
and a majority in interest of the Purchasers. This Agreement may be amended with
only the consent of the Company to include additional purchasers pursuant to
Section 2.3 as "Purchasers" hereunder.
6.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Investor
Rights Agreement or the Restated Certificate, shall impair any such right, power
or remedy, nor shall it be construed to be a waiver of any such breach, default
or noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on the Purchasers'
part of any breach, default or noncompliance under this Agreement, the Investor
Rights Agreement or under the Restated Certificate or any waiver on such party's
part of any provisions or conditions of the Agreement, the Investor Rights
Agreement, or the Restated Certificate must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, the Investor Rights Agreement, the Restated Certificate,
by law, or otherwise afforded to any party, shall be cumulative and not
alternative.
6.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to the
Purchasers at the appropriate address set forth on Exhibit A attached hereto or
at such other address as the Company or Purchaser may designate by ten (10) days
advance written notice to the other parties hereto.
6.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
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6.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.12 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein, except that the Company shall be obligated
to pay BT Alex. Xxxxx Incorporated, an amount equal to up to One Million Eight
Hundred Thousand Dollars ($1,800,000) and a warrant to purchase up to sixty-one
thousand seventeen (61,017) shares of Common Stock of the Company upon the
Closing. Each party hereto further agrees to indemnify each other party for any
claims, losses or expenses incurred by such other party as a result of the
representation in this Section 6.12 being untrue.
6.13 SPECIFIC PERFORMANCE. Each party stipulates that the remedies at
law in the event of any default or threatened default by the other party in the
performance of or compliance with the terms of this Agreement are not and will
not be adequate and that, to the fullest extent permitted by law, such terms may
be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this SERIES D
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
XXX.XXX, INC. [NAME OF PURCHASER]
By:
--------------------------
Name:
------------------------
By: /s/ XXXX STREET Title:
------------------------------------- -----------------------
Xxxx Street
Chairman of the Board, Chief Executive
Officer and President
0000 Xxxxx Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
16.
