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EXHIBIT 10.9
INTERACTIVE KNOWLEDGE, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
PAGE
1. Agreement To Sell And Purchase..................................................................1
1.1 Authorization of the Shares...................................................1
1.2 Sale and Purchase.............................................................1
2. Closing, Delivery And Payment...................................................................2
2.1 Closing.......................................................................2
2.2 Delivery......................................................................2
3. Representations And Warranties Of The Company...................................................2
3.1 Organization, Good Standing and Qualification.................................2
3.2 Subsidiaries..................................................................2
3.3 Capitalization................................................................2
3.4 Authorization; Binding Obligations............................................3
3.5 Financial Statements..........................................................4
3.6 Liabilities...................................................................4
3.7 Agreements; Action............................................................4
3.8 Obligations to Related Parties................................................6
3.9 Changes.......................................................................6
3.10 Title to Properties and Assets; Liens, etc....................................8
3.11 Intellectual Property.........................................................8
3.12 Compliance with Other Instruments.............................................9
3.13 Litigation...................................................................10
3.14 Tax Returns and Payments.....................................................10
3.15 Employees....................................................................11
3.16 Proprietary Information and Inventions Agreements............................11
3.17 Obligations of Management....................................................12
3.18 Registration Rights..........................................................12
3.19 Compliance with Laws; Permits................................................12
3.20 Offering Valid...............................................................12
3.21 Full Disclosure..............................................................12
3.22 Qualified Small Business.....................................................13
3.23 Minute Books.................................................................13
3.24 Real Property Holding Corporation............................................13
3.25 Insurance....................................................................13
3.26 Brokerage....................................................................13
3.27 ERISA........................................................................14
3.28 Environmental and Safety Laws................................................14
3.29 Year 2000 Compliance.........................................................15
4. Representations And Warranties and Covenant Of The Founders....................................15
4.1 Obligations of Founders......................................................15
4.2 Title to Assets..............................................................15
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5. Representations And Warranties Of The Purchasers...............................................15
5.1 Requisite Power and Authority................................................16
5.2 Investment Representations...................................................16
5.3 Transfer Restrictions........................................................17
6. Conditions To Closing..........................................................................17
6.1 Conditions to Purchasers' Obligations at the Closing.........................17
6.2 Conditions to Obligations of the Company.....................................19
7. Miscellaneous..................................................................................20
7.1 Governing Law................................................................20
7.2 Survival.....................................................................20
7.3 Successors and Assigns.......................................................20
7.4 Entire Agreement.............................................................20
7.5 Severability.................................................................20
7.6 Amendment and Waiver.........................................................20
7.7 Remedies; Delays or Omissions................................................21
7.8 Notices......................................................................21
7.9 Expenses.....................................................................21
7.10 Attorneys' Fees..............................................................22
7.11 Titles and Subtitles.........................................................22
7.12 Counterparts.................................................................22
7.13 Broker's Fees................................................................22
7.14 Exculpation Among Purchasers.................................................22
7.15 Pronouns.....................................................................22
7.16 No Strict Construction.......................................................22
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LIST OF EXHIBITS
Schedule of Purchasers Exhibit A
Second Amended and Restated Certificate of Incorporation Exhibit B
Amended and Restated Investors' Rights Agreement Exhibit C
Amended and Restated Stockholders Agreement Exhibit D
Latest Balance Sheet Exhibit E
Proprietary Information and Inventions Agreement Exhibit F
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INTERACTIVE KNOWLEDGE, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of May 17, 1999, by and among INTERACTIVE KNOWLEDGE, INC., a
Delaware corporation (the "Company"), F. Xxxxx Xxxxx, Xxxxx Xxxxxxxx, and
Xxxxxxx X. Xxxxxxx (collectively, the "Founders" and each individually a
"Founder") 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 an aggregate
of six million eight hundred twenty-eight thousand one hundred seventy-six
(6,828,176) shares, $.001 par value per share, of its Series B Preferred Stock
(the "Shares");
WHEREAS, Purchasers desire to purchase the Shares from the Company on the
terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to 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:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF THE SHARES. On or prior to the Closing (as defined
in Section 2 below), the Company shall have authorized (a) the sale and issuance
to Purchasers of the Shares and (b) the issuance of such shares of the Company's
Common Stock, $.001 par value per share (the "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 Second Amended and Restated Certificate of
Incorporation of the Company 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 (as hereinafter defined) the Company hereby agrees to issue and sell
to each Purchaser, severally and not jointly, and each Purchaser agrees to
purchase from the Company, severally and not jointly, the number of Shares set
forth opposite such Purchaser's name on Exhibit A, at a purchase price of
$3.6613 per share.
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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 on May 17, 1999 (the "Closing
Date") at the offices of Holme Xxxxxxx & Xxxx, LLP, 0000 Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx or at such other time or place as the Company and 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, registered in
such Purchaser's or its nominee's name, against payment of the purchase price
therefor by check, wire transfer made payable to the order of the Company,
cancellation of indebtedness or any combination of the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth on
the Schedule of Exceptions delivered by the Company to the Purchasers at the
Closing, the Company hereby represents and warrants to each Purchaser as of the
date of this Agreement as follows:
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. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, the Amended and Restated Investors' Rights Agreement in the form
attached hereto as Exhibit C (the "Investors' Rights Agreement"), the Amended
and Restated Stockholders Agreement in the form attached hereto as Exhibit D
(the "Stockholders Agreement") and any other agreements contemplated hereby or
thereby (collectively, the "Related Agreements"), to issue and sell the Shares
and to issue the Conversion Shares and to carry out the provisions of this
Agreement, the Related Agreements and the Restated Certificate and to carry on
its business as presently conducted and as presently proposed to be conducted.
The Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all 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.
3.2 SUBSIDIARIES. The Company does not own or hold any rights to acquire
any equity securities of any other corporation, limited partnership, limited
liability company or similar entity. The Company is not a participant in any
joint venture, partnership or similar arrangement.
3.3 CAPITALIZATION. The authorized capital stock of the Company,
immediately prior to the Closing, will consist of (a) twenty million
(20,000,000) shares of Common Stock, par value $.001 per share, three million
two hundred seventy-three thousand five hundred eighty-nine (3,273,589) shares
of which are issued and outstanding and two million two hundred ninety-three
thousand seventy-seven (2,293,077) shares of which are reserved for future
issuance to employees pursuant to the Company's Stock Option Plan, (b) five
million two hundred seventy-five thousand
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(5,275,000) shares of the Company's Series A Preferred Stock, par value $.001
per share (the "Series A Stock"), five million two hundred twenty-five thousand
(5,225,000) of which are issued and outstanding and (c) six million nine hundred
twenty-eight thousand one hundred seventy-six (6,928,176) shares of the
Company's Series B Preferred Stock, par value $.001 per share (the "Series B
Stock"), none of which are issued and outstanding. All issued and outstanding
shares of the Company's Common Stock, Series A Stock and Series B Stock (a) have
been duly authorized and validly issued, (b) are fully paid and nonassessable
and (c) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The rights, preferences, privileges and
restrictions of the Shares are as stated in the Restated Certificate. Each of
the Series A Stock and the Series B Stock is convertible into Common Stock
initially on a one-for-one basis. The Conversion Shares have been duly and
validly reserved for issuance. Except as set forth on Schedule 3.3, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of its
securities. When issued in compliance with the provisions of this Agreement and
the Restated Certificate, the Shares and the Conversion Shares will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances; provided, however, that the Shares and the Conversion Shares may
be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein or as otherwise required by such laws at the time a
transfer is proposed. No stock plan, stock purchase, stock option or other
agreement or understanding between the Company and any holder of any equity
securities or rights to purchase equity securities provides for acceleration or
other changes in the vesting provisions or other terms of such agreement or
understanding as the result of any merger, consolidated sale of stock or assets,
change in control or other similar transaction by the Company. As of the
Closing, the Company shall not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or any warrants, options or other rights to acquire its capital
stock, except pursuant to the Restated Certificate.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization and execution of this Agreement and the Related Agreements, the
performance of all obligations of the Company hereunder and thereunder at the
Closing and the authorization, sale, issuance and delivery of the Shares
pursuant hereto and the Conversion Shares pursuant to the Restated Certificate
has been taken or will be taken prior to the Closing. The Agreement and the
Related Agreements, when executed and delivered, will be valid and binding
obligations of the Company enforceable in accordance with their terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights;
(b) general principles of equity that restrict the availability of equitable
remedies; and (c) to the extent that the enforceability of the indemnification
provisions in Section 2.9 of the Investors' Rights Agreement may be limited by
applicable laws. The sale of the Shares and the subsequent conversion of the
Shares into Conversion Shares are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.
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3.5 FINANCIAL STATEMENTS. The Company has delivered to each Purchaser
the following financial statements:
(a) the unaudited balance sheet of the Company as of December 31,
1998 (the "Year-End Balance Sheet") and the related statements of income and
cash flows (or the equivalent) for the six-month period then ended; and
(b) the unaudited balance sheet of the Company as of March 31, 1999
(the "Latest Balance Sheet," and together with the Year-End Balance Sheet, the
"Financial Statements") and the related statements of income and cash flows (or
the equivalent) for the nine-month period then ended, a copy of which is
attached hereto as Exhibit E.
The Financial Statements, together with the notes thereto, if any, 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 set forth therein.
3.6 LIABILITIES. Except as set forth in Schedule 3.6, the Company has no
material liabilities not disclosed in the Latest Balance Sheet, except current
liabilities incurred in the ordinary course of business subsequent to the
Statement Date which have not been, either in any individual case or in the
aggregate, materially adverse.
3.7 AGREEMENTS; ACTION.
(a) Except as set forth in Schedule 3.7(a), agreements explicitly
contemplated hereby and agreements between the Company and its employees with
respect to the sale of the Company's Common Stock, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, employees, stockholders, affiliates or any affiliate
thereof, nor do any of such individuals or entities have any material interest
in any material property used by the Company.
(b) Except as expressly contemplated by this Agreement or as set
forth on Schedule 3.7(b), Schedule 3.15 or Schedule 3.27, the Company is not a
party to or bound by any written or oral:
(1) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or
arrangement, or any collective bargaining agreement or any other contract
with any labor union, or severance agreements, programs, policies or
arrangements;
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(2) contract under which the Company has advanced or loaned any
other person amounts in the aggregate exceeding $50,000;
(3) agreement or indenture relating to borrowed money or other
indebtedness or the mortgaging, pledging or otherwise placing a lien,
encumbrance or charge of any kind on any material asset or material
group of assets of the Company;
(4) guarantee of any obligation;
(5) lease or agreement under which the Company is lessee of or
holds or operates any property, real or personal, owned by any other
party;
(6) lease or agreement under which the Company is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by the Company;
(7) contract or group of related contracts with the same party
or group of affiliated parties the performance of which involves
consideration in excess of $10,000;
(8) assignment, license, indemnification or agreement with
respect to any intangible property (including, without limitation, any
Intellectual Property);
(9) warranty agreement with respect to its services rendered or
its products sold or leased;
(10) sales, distribution or franchise agreement;
(11) agreement with a term of more than six (6) months which is
not terminable by the Company upon less than thirty (30) days notice
without penalty;
(12) contract or agreement prohibiting it from freely engaging
in any business or competing anywhere in the world; or
(13) any other agreement which is material to its operations and
business prospects.
(c) All of the contracts, agreements and instruments set forth on
Schedule 3.7(b), Schedule 3.15 or Schedule 3.27 are valid, binding and
enforceable in accordance with their respective terms. The Company has performed
all material obligations required to be performed by it and is not in default
under or in breach of nor in receipt of any claim of default or breach under
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any material term of any material contract, agreement or instrument to which the
Company is subject; no event has occurred which with the passage of time or the
giving of notice or both would result in a default, breach or event of
noncompliance by the Company under any material term of any material contract,
agreement or instrument to which the Company is subject; the Company has no
present expectation or intention of not fully performing all such obligations;
the Company has no knowledge of any breach or anticipated breach by the other
parties to any material term of any material contract, agreement, instrument or
commitment to which it is a party; and the Company is not a party to any
materially adverse contract or commitment.
(d) Except as set forth in Schedule 3.7(d), the Company has not (1)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (2) incurred any
indebtedness for money borrowed or any other liabilities (other than with
respect to dividend obligations, distributions, indebtedness and other
obligations incurred in the ordinary course of business or as disclosed in the
Latest Balance Sheet individually in excess of $10,000 or, in the case of
indebtedness and/or liabilities individually less than $10,000, in excess of
$25,000 in the aggregate), (3) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (4) 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.
(e) For the purposes of subsections (b) and (d) 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.
3.8 OBLIGATIONS TO RELATED PARTIES. Except as set forth in Schedule 3.8,
there are no obligations of the Company to officers, directors, stockholders, or
employees of the Company other than (a) for payment of salary for services
rendered, (b) reimbursement for reasonable expenses incurred on behalf of the
Company and (c) for other standard employee benefits made generally available to
all employees (including stock option agreements outstanding under any stock
option plan approved by the Board of Directors of the Company(the "Board")). No
officer, director or stockholder, or any member of their immediate families, is,
directly or indirectly, interested in any material contract with the Company
(other than such contracts as relate to any such person's employment by or
ownership of capital stock or other securities of the Company). The Company is
not a guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
3.9 CHANGES. Except as set forth in Schedule 3.9, since the Statement
Date, there has not been:
(a) Any change in the assets, liabilities, financial condition,
operations, business prospects, employee relations or customer or supplier
relations of the Company from that reflected in the Latest Balance Sheet, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect on
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such assets, liabilities, financial condition, operations, business prospects,
employee relations or customer or supplier relations of the Company;
(b) Any resignation or termination of any key officers of the
Company; and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business,
in the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any redemption, repurchase, declaration or payment of any
dividend or other distribution of the assets of the Company other than pursuant
to agreements which have been approved by the Board and which permit the Company
to repurchase such shares upon termination of services to the Company or in
exercise of the Company's right of first refusal upon a proposed transfer;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets or any material tangible
assets;
(l) Any change in any material agreement to which the Company is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company; or
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(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company. For purposes of this subsection (m), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $25,000.
3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as set forth in
Schedule 3.10 and subject to Schedule 3.11, the Company has good and marketable
title to its properties and assets, including without limitation, the properties
and assets reflected in the Latest Balance Sheet, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (a) those resulting from taxes which have not
yet become delinquent, (b) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially impair the
operations of the Company, and (c) those attributable to purchase money security
interests or equipment leases and similar financings disclosed on the Schedule
of Exceptions. All facilities, equipment, fixtures and other properties owned,
leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. The
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.
3.11 INTELLECTUAL PROPERTY.
(a) The attached Schedule 3.11 contains a complete and accurate
list of all (a) material patented or registered Intellectual Property (as
hereinafter defined) owned or used by the Company, (b) material pending patent
applications and applications for registrations of other Intellectual Property
filed by the Company, (c) material unregistered trade names and corporate names
owned or used by the Company and (d) material unregistered trademarks, service
marks, copyrights, and proprietary computer software owned or used by the
Company, in each case which are material to the financial condition, operating
results, assets, operations or business prospects of the Company. Schedule 3.11
also contains a complete and accurate list of all licenses and other rights
granted by the Company to any third party with respect to any material
Intellectual Property and all licenses and other rights granted by any third
party to the Company with respect to any material Intellectual Property in each
case (excluding "off-the-shelf" programs or products) identifying the subject
Intellectual Property. To the best of the Company's knowledge, there is no
threatened or reasonably foreseeable loss or expiration of any Intellectual
Property or related group of Intellectual Property owned or used by the Company
that would have a material adverse effect on the Company. The Company has taken
such commercially reasonably necessary, appropriate and desirable actions as it
believes appropriate to maintain and protect the Intellectual Property which it
owns. "Intellectual Property" means all (i) patents, patent applications, patent
disclosures and inventions, (ii) trademarks, service marks, trade dress, trade
names, logos and corporate names and registrations and applications for
registration thereof together with all of the goodwill associated therewith,
(iii) copyrights (registered or unregistered) and copyrightable works and
registrations and applications for registration thereof, (iv) computer software,
data, data bases and documentation
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thereof, and (v) trade secrets and other confidential information (including,
without limitation, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial and marketing plans and customer and
supplier lists and information).
(b) Except as set forth in Schedule 3.11, the Company owns or
possesses sufficient legal rights to all Intellectual Property necessary for its
business as now conducted and as presently proposed to be conducted, without any
known infringement of the rights of others. Except as set forth on Schedule
3.11, there are no outstanding options, licenses or agreements of any kind
relating to the Company's Intellectual Property, nor is the Company bound by or
a party to any options, licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes of any other
person or entity, other than licenses or agreements arising from the purchase of
"off the shelf" or standard programs or products. Except as set forth on
Schedule 3.11, the Company has not received any communications alleging that the
Company has violated or, by conducting its business as presently proposed to be
conducted, 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. The Company has no knowledge that it is infringing upon the
Intellectual Property rights of any third party. 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 their duties to the Company or that would conflict with the
Company's business as presently proposed to be conducted. Neither the execution
nor 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
presently proposed to be conducted, will 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 individual of the "Management
Team" (as defined in the Executive Summary, dated February 1999) is now
obligated. The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company or its predecessor, except for
inventions, trade secrets or proprietary information that have been assigned to
the Company.
3.12 COMPLIANCE WITH OTHER INSTRUMENTS. Except as set forth in Schedule
3.12, the Company is not in violation or default of any term of its Restated
Certificate or Bylaws, or of any provision of any mortgage, indenture, contract,
agreement, instrument or contract to which it is party or by which it is bound
or of any judgment, decree, order, writ or, any statute, rule or regulation
applicable to the Company which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company. The execution, delivery, and performance of and compliance with
this Agreement and the Related Agreements, and the issuance and sale of the
Shares pursuant hereto and of the Conversion Shares pursuant to the Restated
Certificate, will not, with or without the passage of time or giving of notice,
result in any such material violation, or be in conflict with or constitute a
default under any such term, or result
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in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit license, authorization or
approval applicable to the Company, its business or operations or any of its
assets or properties.
3.13 LITIGATION. Except as set forth in Schedule 3.13, there is no
action, suit, proceeding or investigation pending or to the Company's knowledge
currently threatened against the Company with respect to its businesses or
proposed business activities or that questions the validity of this Agreement,
or the Related Agreements or the right of the Company to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby, or
which might result, either individually or in the aggregate, in any material
adverse change in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company, nor is the Company aware that there is any basis for the foregoing. The
foregoing includes, without limitation, actions pending or threatened in writing
(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 subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.14 TAX RETURNS AND PAYMENTS.
(a) Except as set forth on Schedule 3.14, the Company has filed all
Tax Returns which it is required to file under applicable laws and regulations;
all such Tax Returns are complete and correct in all material respects and have
been prepared in compliance with all applicable laws and regulations in all
material respects; the Company in all material respects has paid all Taxes due
and owing by it (whether or not such Taxes are required to be shown on a Tax
Return) and has withheld and paid over to the appropriate taxing authority all
Taxes which it is required to withhold from amounts paid or owing to any
employee, stockholder, creditor or other third party; the Company has not waived
any statute of limitations with respect to any material Taxes or agreed to any
extension of time with respect to any material Tax assessment or deficiency; the
accrual for Taxes on the Latest Balance Sheet would be adequate to pay all Tax
liabilities of the Company if its current tax year was treated as ending on the
date of the Latest Balance Sheet (excluding any amount recorded which is
attributable solely to timing differences between book and Tax income); since
the date of the Latest Balance Sheet, the Company has not incurred any material
liability for Taxes other than in the ordinary course of business; the
assessment of any additional Taxes for periods for which Tax Returns have been
filed by the Company is not expected to exceed the recorded liability therefor
on the Latest Balance Sheet (excluding any amount recorded which is attributable
solely to timing differences between book and Tax income); no foreign, federal,
state or local tax audits or administrative or judicial proceedings are pending
or being conducted with respect to the Company, no information related to Tax
matters has been requested by any foreign, federal, state or local taxing
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authority and no written notice indicating an intent to open an audit or other
review has been received by the Company from any foreign, federal, state or
local taxing authority; and there are no material unresolved questions or claims
concerning the Company's Tax liability.
(b) The Company has not made an election under Section 341(f) of
the Internal Revenue Code of 1986, as amended (the "IRC"). The Company is not a
party to any tax sharing agreement. The Company has disclosed on its federal
income Tax Returns any position taken for which substantial authority (within
the meaning of IRC Section 6662(d)(2)(B)(i)) did not exist at the time the
return was filed. The Company has not made any payments, is not obligated to
make payments or is a party to an agreement that could obligate it to make any
payments that would not be deductible under IRC Section 280G.
(c) "Tax" or "Taxes" means federal, state, county, local, foreign
or other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not. "Tax Return" means any return, information
report or filing with respect to Taxes, including any schedules attached thereto
and including any amendment thereof.
3.15 EMPLOYEES. Except as set forth in Schedule 3.15, the Company is not
a party to or bound by any currently effective employment contract, deferred
compensation arrangement, bonus plan, incentive plan, profit sharing plan,
retirement agreement or other employee compensation plan or agreement. To the
Company's knowledge, no employee of the Company, nor any consultant with whom
the Company has contracted, is in violation of any term of any proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company because of the
nature of the business to be conducted by the Company; and to the Company's
knowledge, the continued employment by the Company of its present employees, and
the performance of the Company's contracts with its independent contractors,
will not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. 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, nor does the
Company have a present intention to terminate the employment of any officer, key
employee or group of key employees.
3.16 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each former and
current employee, officer and consultant of the Company and each former and
current employee of the predecessors to the Company who has participated in the
development of the Company's technology has executed a Proprietary Information
and Inventions Agreement in the form(s) of Exhibit F attached hereto. No current
employee, officer or consultant of the Company has excluded
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works or inventions made prior to his or her employment with the Company from
his or her assignment of inventions pursuant to such employee, officer or
consultant's Proprietary Information and Inventions Agreement.
3.17 OBLIGATIONS OF MANAGEMENT. Except as set forth in Schedule 3.17,
each officer of the Company is currently devoting substantially all of his or
her business time to the conduct of the business of the Company. The Company is
not aware of any officer or key employee of the Company planning to work less
than full time at the Company in the future.
3.18 REGISTRATION RIGHTS. Except as required pursuant to the Investors'
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1.1 of the Investors'
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.19 COMPLIANCE WITH LAWS; PERMITS. The Company is not in violation of
any applicable statute, rule, regulation, order or restriction of any domestic
or foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. Except as set forth on
Schedule 3.19, no governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of this
Agreement, the Related Agreements and the issuance of the Shares or the
Conversion Shares. 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.
3.20 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 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 or any state securities laws.
3.21 FULL DISCLOSURE. This Agreement, the Exhibits hereto, the Related
Agreements and all other documents delivered by the Company to Purchasers or
their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, do not contain any untrue statement
of a material fact nor, to the Company's knowledge, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
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Notwithstanding the foregoing, the Business Plan, dated January 1999, as
supplemented by the Executive Summary, dated February 1999, and the financial
model, dated March 1999, (the "Business Plan") provided to each of the
Purchasers was prepared by the management of the Company in a good faith effort
to describe the Company's presently proposed business and products and the
markets therefore. The assumptions applied in preparing the Business Plan
appeared reasonable to management as of the date thereof and as of the date
hereof; however, there is no assurance that these assumptions will prove to be
valid or that the objectives set forth in the Business Plan will be achieved. To
the Company's knowledge, there are no facts which (individually or in the
aggregate) materially adversely affect the business, assets, liabilities,
financial condition, prospects or operations of the Company that have not been
set forth in the Agreement, the Exhibits hereto, the Related Agreements or in
other documents delivered to Purchasers or their attorneys or agents in
connection herewith.
3.22 QUALIFIED SMALL BUSINESS. The Company represents and warrants to
the Purchasers that the Company is a "qualified small business" within the
meaning of Section 1202(d) of the Internal Revenue Code of 1986, as amended (the
"Code") as of the date hereof and the Shares should qualify as "qualified small
business stock" as defined in Section 1202(c) of the Code as of the date hereof.
The Company further represents and warrants that, as of the date hereof, it
meets the "active business requirement" of Section 1202(e) of the Code, and it
has made no "significant redemptions" within the meaning of Section
1202(c)(3)(B) of the Code. The Company will use reasonable efforts to comply
with the reporting and recordkeeping requirements of Section 1202 of the Code,
any regulations promulgated thereunder and any similar state laws and
regulations, and agrees not to repurchase any stock of the Company if such
repurchase would constitute a "significant redemption" within the meaning of
Section 1202(c)(3)(B) of the Code with respect to the Sharers.
3.23 MINUTE BOOKS. The minute books of the Company provided to the
Purchasers contain a complete summary of all meetings of directors and
stockholders since the time of incorporation.
3.24 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.
3.25 INSURANCE. The attached Schedule 3.25 contains a description of
each insurance policy maintained by the Company with respect to its properties,
assets and businesses, and each such policy is in full force and effect as of
the Closing. The Company is not in default with respect to its obligations under
any insurance policy maintained by it, and the Company has not been denied
insurance coverage. The insurance coverage of the Company is customary for
corporations of similar size engaged in similar lines of business. The Company
does not have any self-insurance or co-insurance programs.
3.26 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on
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any arrangement or agreement entered into by and binding upon the Company. The
Company shall pay, and hold each Purchaser harmless against, any liability, loss
or expense (including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
3.27 ERISA.
(a) The Company does not have any obligation to contribute to (or
any other liability, including current or potential withdrawal liability, with
respect to) any "multiemployer plan" (as defined in Section 3(37) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")).
(b) The Company does not maintain or have any obligation to
contribute to (or any other liability with respect to) any plan or arrangement
whether or not terminated, which provides medical, health, life insurance or
other welfare-type benefits for current, retired, terminated or future retired
or terminated employees (except for limited continued medical benefit coverage
required to be provided under Section 4980B of the IRC or as required under
applicable state law).
(c) The Company does not maintain, contribute to or have any
liability under (or with respect to) any employee plan which is a tax-qualified
"defined benefit plan" (as defined in Section 3(35) of ERISA), whether or not
terminated.
(d) Except as set forth on Schedule 3.27, the Company does not
maintain, contribute to or have any liability under (or with respect to) any
employee plan which is a tax-qualified "defined contribution plan" (as defined
in Section 3(34) of ERISA), whether or not terminated.
(e) Except as set forth on Schedule 3.27, the Company does not
maintain, contribute to or have any liability under (or with respect to) any
plan or arrangement providing benefits to current or former employees, including
any bonus plan, plan for deferred compensation, employee health or other welfare
benefit plan or other arrangement, whether or not terminated.
(f) For purposes of this Section 3.27, the term "Company" includes
all organizations under common control with the Company pursuant to Section
414(b) or (c) of the IRC.
3.28 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in material
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and not material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation. The operations of the Company do not involve any asbestos,
urea-formaldehyde foamed-in-place insulation, polychlorinated biphenyls ("PCBs")
or any other hazardous substances or materials including, but not limited to,
hazardous substances or materials under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act, the Resource Conservation and Recovery
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Act, the Minnesota Environmental Response and Liability Act, or any other
federal, state or local statute, regulation, code or ordinance.
3.29 YEAR 2000 COMPLIANCE. None of the computer software, computer
firmware, computer hardware (whether general or special purposes) or other
similar or related items of automated, computerized or software systems that are
used or relied on by the Company in the conduct of its business will
malfunction, will cease to function, will general incorrect data or will produce
incorrect results when processing, providing or receiving (a) date-related data
from, into and between the twentieth and twenty-first centuries or (b)
date-related data in connection with any valid date in the twentieth and
twenty-first centuries ("Year 2000 Compliance"), in each instance in such a
manner as to cause material adverse harm to the Company and the Company will not
be required to incur any further material expense in order to become Year 2000
Compliant. The Company will not be subject to any material liability or claims
by its customers or employees due to its failure to be Year 2000 Compliant. The
Company has developed reasonable contingency plans to deal with the possibility
that some of its customers and suppliers may not be Year 2000 Compliant.
4. REPRESENTATIONS AND WARRANTIES AND COVENANT OF THE FOUNDERS.
Each Founder hereby represents and warrants to the Company and to the
Purchasers as follows (such representations and warranties do not lessen or
obviate the representations and warranties of the Company and the Purchasers set
forth in this Agreement):
4.1 OBLIGATIONS OF FOUNDERS. Each Founder is currently devoting
substantially all of his business time to the Company. Each Founder hereby
covenants and agrees that he will continue to devote substantially all of his
business time to the Company for so long as he is employed by the Company.
4.2 TITLE TO ASSETS. The Founders, together with InfoMaster and
InfoMaster CD-ROM, LLC ("InfoMaster LLC"), have directly or indirectly conveyed
to the Company its entire interest in all of the assets, rights, agreements and
other proprietary rights, whether tangible or intangible, including without
limitation interests in technology and other intellectual property rights, that
are necessary to conduct the Company's business as proposed to be conducted in
the Business Plan, other than the rights described in the Preincorporation
Agreement and Contribution Agreement, dated as of August 1, 1998 (the
"Contribution Agreement") and other than a license to the Folio search engine,
which has been retained by InfoMaster.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
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5.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (b) general principles
of equity that restrict the availability of equitable remedies, and (c) to the
extent that the enforceability of the indemnification provisions of Section 2.9
of the Investors' Rights Agreement may be limited by applicable laws.
5.2 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 the 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) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares
and the Conversion Shares for Purchaser's own account for investment only, and
not with a view towards their distribution.
(c) 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 Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
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(e) COMPANY INFORMATION. Purchaser 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) RULE 144. Purchaser acknowledges and agrees that the Shares,
and, if issued, 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 as in effect from
time to time, 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 following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) RESIDENCE. If the Purchaser is an individual, then the Purchaser
resides in the state or province identified in the address of the Purchaser set
forth on Exhibit A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of the Purchaser
in which its investment decision was made is located at the address or addresses
of the Purchaser set forth on Exhibit A.
5.3 TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investors' Rights Agreement.
6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing Date, 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 Date with the
same force and effect as if they had been made as of the Closing Date, 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; provided that, for
purposes of this Section 6.1(a), those representations and warranties that are
qualified by references to "material" or "material adverse change" or "material
adverse effect" shall retain those qualifications but otherwise shall be true
and correct in all respects.
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(b) LEGAL INVESTMENT. On the Closing Date, 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 Purchasers and the Company are
subject.
(c) 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 Related
Agreements (except for such as may be properly obtained subsequent to the
Closing as agreed upon by the Purchasers).
(d) FILING OF RESTATED CERTIFICATE. The Restated Certificate shall
have been filed with the Secretary of State of the State of Delaware and be in
full force and effect as of the Closing Date.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to
Purchasers or their counsel, copies of all corporate documents of the Company as
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
Purchasers a Compliance Certificate, executed by the President of the Company,
dated as of the Closing Date, to the effect that the conditions specified in
subsections (a), (c), (d), (f) and (j) of this Section 6.1 have been satisfied.
(h) INVESTORS' RIGHTS AGREEMENT. An Amended and Restated Investors'
Rights Agreement substantially in the form attached hereto as Exhibit C shall
have been executed and delivered by the parties thereto.
(i) STOCKHOLDERS AGREEMENT. An Amended and Restated Stockholders
Agreement substantially in the form attached hereto as Exhibit D shall have been
executed and delivered by the parties thereto.
(j) BOARD OF DIRECTORS. The authorized size of the Board shall
consist of seven (7) members, and such Board shall initially consist of Xxxx
Xxxxxx (outside director designated by the holders of Common Stock), Xxxxx
Xxxxxxxx (outside director designated by the holders of the Series A Stock and
Series B Stock), Xxx Washing (designee of Sequel Limited Partnership), Xxxxx
Xxxxxxxxx (designee of Anschutz Family Investment Company), Xxxxxx Xxxxx and [to
be determined] (designees of DLJ Capital Corp., DLJ ESC II, L.P., Sprout Capital
VIII, L.P. and Sprout Venture Capital, L.P. (collectively, "The Sprout Group"))
and Xxx Xxxxxxx (Chief Executive Officer).
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(k) LEGAL OPINION. The Purchasers shall have received from legal
counsel to the Company an opinion addressed to them, dated as of each Closing
Date, in a form reasonably acceptable to Purchasers.
(l) 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.
(m) AMENDMENT OF STOCK OPTION PLAN. The Company shall have amended
its Stock Option Plan in a form acceptable to the Purchasers to provide for the
issuance of an additional 600,000 shares of Common Stock thereunder (for a total
of 2,446,666 shares).
(n) AMENDMENT OF FOUNDER'S STOCK PURCHASE AGREEMENTS. The Company
shall have amended each of the Founder's Stock Purchase Agreements it has
executed with the Founders to provide that, in the event the Company chooses not
to repurchase any or all available shares of Common Stock pursuant to its
repurchase rights thereunder, the right to repurchase such Common Stock shall be
exercisable on a prorata basis by the other Founders and Xxxx Xxxxxx or Xxxxx X.
Xxxxxxxx, as the case may be, and the holders of the Series A Stock and Series B
Stock.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at each Closing is subject to the satisfaction, on
or prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by those Purchasers acquiring Shares in Section 4 hereof shall
be true and correct in all material 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. Such Purchasers shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by such Purchasers 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 and be in
full force and effect as of the Closing.
(d) INVESTORS' RIGHTS AGREEMENT. An Amended and Restated Investors'
Rights Agreement substantially in the form attached hereto as Exhibit C shall
have been executed and delivered by the Purchasers.
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(e) STOCKHOLDERS AGREEMENT. An Amended and Restated Stockholders
Agreement substantially in the form attached hereto as Exhibit D shall have been
executed and delivered by the parties thereto.
(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 Related
Agreements (except for such as may be properly obtained subsequent to the
Closing as agreed upon by the Purchasers).
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Colorado or any other jurisdiction), that would cause
the application of the laws of any other jurisdiction other than the State of
Colorado.
7.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser 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.
7.3 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.
7.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Related Agreements 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.
7.5 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.
7.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and holders of at least two-thirds (2/3) of the Shares
(treated as if converted
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and including any Conversion Shares into which the Shares have been converted
that have not been sold to the public).
(b) The obligations of the Company and the rights of the holders of
the Shares and the Conversion Shares under the Agreement may be waived only with
the written consent of the holders of at least two-thirds (2/3) of the Shares
(treated as if converted and including any Conversion Shares into which the
Shares have been converted that have not been sold to the public).
7.7 REMEDIES; DELAYS OR OMISSIONS.
(a) All remedies, either under this Agreement, the Related
Agreements, the Restated Certificate, by law, or otherwise afforded to any
party, shall be cumulative and not alternative. Any person having any rights
under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
(b) 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 Related Agreements 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 any Purchaser's part of any breach, default
or noncompliance under this Agreement, the Related Agreements or under the
Restated Certificate or any waiver on such party's part of any provisions or
conditions of the Agreement, the Related Agreements, or the Restated Certificate
must be in writing and shall be effective only to the extent specifically set
forth in such writing.
7.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) 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 each Purchaser
at the 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.
7.9 EXPENSES. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement. The Company shall, at the Closing, reimburse (i) the reasonable
fees and expenses (not to exceed $25,000) of Xxxxxxxx & Xxxxx as counsel to The
Sprout Group and Marquette Ventures Partners III, L.P., (ii) the reasonable fees
and expenses (not to exceed $7,500) of Xxxxxx Godward LLP as counsel to Sequel
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Limited Partnership, Pearl Street Trust, Bowana Foundation, Xxxx Xxxxxxx and
Xxxxxxx Xxxxxx, and (iii) the reasonable fees and expenses (not to exceed
$7,500) of Xxxxxxxx & Xxxxxx as counsel to Covestco-Medeura, LLC, incurred in
connection with the negotiation, execution, delivery and performance of this
Agreement, the agreements referenced herein and the transactions contemplated
hereby and thereby.
7.10 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.
7.11 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.
7.12 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.
7.13 BROKER'S FEES. Except for obligations set forth in Schedule
7.13, 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. 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 7.13 being untrue.
7.14 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that
it is not relying upon any person, firm, or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
7.15 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
7.16 NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and
22
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no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
28
IN WITNESS WHEREOF, the parties hereto have executed the SERIES B PREFERRED
STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
INTERACTIVE KNOWLEDGE, INC. SEQUEL LIMITED PARTNERSHIP
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
By: Sequel Venture Partners, L.L.C.
By: /s/ XXXXXXX X. XXXXXXX Its: General Partner
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and By: /s/ XXXXXX WASHING
--------------------------------------
Chief Executive Officer Manager
FOUNDERS: SEQUEL EURO LIMITED PARTNERSHIP
/s/ F. XXXXX XXXXX By: Sequel Venture Partners, L.L.C.
----------------------------------- Its: General Partner
F. Xxxxx Xxxxx
/s/ XXXXX XXXXXXXX By: /s/ XXXXXX WASHING
----------------------------------- --------------------------------------
Xxxxx Xxxxxxxx Manager
/s/ XXXXXXX X. XXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxx ANSCHUTZ FAMILY INVESTMENT COMPANY LLC
By: Anschutz Company
Its: Manager
By: /s/ XXXXX X. XXXXXX
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
REPERTOIRE CAPITAL VENTURES RLLLP
By: /s/ XXXX XXXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxxx
Title: General Partner
29
UNIVERSITY OF COLORADO CENTER FOR
ENTREPRENEURSHIP VENTURE CAPITAL FUND
By: /s/ XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Treasurer
WORLD VENTURE PARTNERS, INC.
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
/s/ XXXXX X. XXXXXXXX
-----------------------------------------
XXXXX X. XXXXXXXX
DLJ CAPITAL CORP.
By: /s/ XXXXXX XXXXX
--------------------------------------
Name: Xxxxxx Xxxxx
Its: Attorney in Fact
DLJ ESC II, L.P.
By: DLJ LBO Plans Management Corporation
Its: Manager
By: /s/ XXXXXX XXXXX
--------------------------------------
Name: Xxxxxx Xxxxx
Its: Attorney in Fact
SPROUT CAPITAL VIII, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By: /s/ XXXXXX XXXXX
--------------------------------------
Name: Xxxxxx Xxxxx
Its: Attorney in Fact
30
SPROUT VENTURE CAPITAL, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By: /s/ XXXXXX XXXXX
--------------------------------------
Name: Xxxxxx Xxxxx
Its: Attorney in Fact
MARQUETTE VENTURE PARTNERS III, L.P.
By: Marquette III, L.L.C.
Its: General Partner
By: /s/ XXXX XXXX
--------------------------------------
Name: Xxxx Xxxx
Title: Authorized Signatory
PEARL STREET TRUST
By: /s/ XXXXX X. XXXX
--------------------------------------
Name: Xxxxx X. Xxxx
Title: Trustee
BOWANA FOUNDATION
By: /s/ XXXX X. XXXXXXX
--------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
/s/ XXXX X. XXXXXXX
-----------------------------------------
XXXX XXXXXXX
/s/ XXXXXXX XXXXXX
-----------------------------------------
XXXXXXX XXXXXX
31
COVESTCO-MEDEURA, LLC
By: Medeura Limited
Its: Manager
By: /s/ XXXXX XXXXXX
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Director
MARKET STREET PARTNERS NL
By: /s/ XXXXXXX X. XXXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing General Partner
/s/ XXXXX X. XXXXXXXX
-----------------------------------------
XXXXX X. XXXXXXXX
