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EXHIBIT 10.12
XXXXXXX.XXX, INC.
SERIES E PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
THIS SERIES E PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the
"AGREEMENT") is entered into as of July 15, 1999 by and among XXXXXXX.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 (collectively the "PURCHASERS" and
individually a "PURCHASER").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of (i) one million eight hundred forty-six thousand one hundred
fifty-three (1,846,153) shares of its Series E Preferred Stock (the "SERIES E
STOCK") and (ii) warrants to purchase two hundred seventy-six thousand nine
hundred twenty-two (276,922) shares of the Company's Series E Stock,
substantially in the form attached hereto as Exhibit B;
WHEREAS, Purchasers desire to purchase an aggregate of six hundred
thirty thousand seven hundred thirty-eight (630,738) shares of Series E Stock
(the "SHARES") and warrants (the "WARRANTS", and together with the Shares, the
"SECURITIES") to purchase an aggregate of ninety-four thousand six hundred eight
(94,608) shares of Series E Stock (the "WARRANT SHARES") on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Securities 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 SECURITIES. On or prior to the First Closing (as
defined in Section 2 below), the Company shall have authorized (a) the sale and
issuance to Purchasers of the Securities to be sold at the First Closing and
Second Closing (as defined in Section 2 below), and (b) the issuance of the
Warrant Shares and the issuance of such shares of Common Stock to be issued upon
conversion of the Series E Stock and of the Warrant Shares (collectively, 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, in the form attached hereto as
Exhibit C (the "RESTATED CERTIFICATE").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the First Closing, 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, (a) the number of Shares set forth
opposite such Purchaser's name under the heading "First Closing" on Exhibit A,
at a purchase price of Six Dollars and Fifty Cents ($6.50) per Share, and (b)
the
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number of Warrants set forth opposite such Purchaser's name under the heading
"First Closing" on Exhibit A, at a purchase price of One Cent ($.01) per Warrant
Share.
2. CLOSING, DELIVERY AND PAYMENT
2.1 CLOSING. The initial closing of the sale and purchase of the
Securities under this Agreement (the "FIRST CLOSING") shall take place at 10:00
a.m. (Colorado time) on the date hereof, at the offices of Xxxxxx Godward LLP,
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, or at such other time
or place as the Company and Purchasers may mutually agree. The closing of the
sale and purchase of the Securities set forth in Section 2.2 below shall take
place at such time and place as the Company and Purchasers participating therein
shall mutually agree (the "SECOND CLOSING") (the First Closing and Second
Closing shall collectively be referred to herein as a "CLOSING" and each such
date is referred to as a "CLOSING DATE"). At each Closing, subject to the terms
and conditions hereof, the Company will deliver to the Purchasers certificates
representing the number of Shares to be purchased and warrants representing the
number of Warrants to be purchased at such Closing by each Purchaser, against
payment of the purchase price therefor by certified check or wire transfer of
immediately available funds.
2.2 SUBSEQUENT SALE OF SECURITIES. Following the First Closing, subject
to the terms and conditions hereof, at the Second Closing, 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, (a)
the number of Shares set forth opposite such Purchaser's name under the heading
"Second Closing" on Exhibit A and (b) the number of Warrants set forth opposite
such Purchaser's name under the heading "Second Closing" on Exhibit A. At the
Second Closing, the Company shall offer the remaining Securities not sold to the
Purchasers at the First Closing or to be sold to the Purchasers at the Second
Closing to the holders of the Company's Common Stock on a pro rata basis (the
"RIGHTS OFFERING"). All sales made pursuant to this Section 2.2 shall be made on
the terms and conditions set forth in this Agreement. Any Shares of Series E
Stock sold pursuant to this Section 2.2 shall be deemed to be "Shares" for all
purposes of this Agreement, any Warrants sold pursuant to this Section 2.2 shall
be deemed to be "Warrants" for all purposes under this Agreement and any
purchasers thereof shall be deemed to be "Purchasers" for all purposes of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule delivered by the Company
to the Purchasers in connection with the signing hereof (with each item of the
Disclosure Schedule being deemed to apply to a particular section of this
Section 3 and not to all Sections of this Agreement), the Company hereby
represents and warrants to each Purchaser 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 and the Third Amended and Restated Stockholders' Agreement, in
the form attached hereto as Exhibit D (the "STOCKHOLDERS' AGREEMENT"), to issue
and sell the Securities and issue the Conversion Shares, and to carry out
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the provisions of this Agreement and the Stockholders' Agreement, and to carry
on its business as presently conducted and as presently proposed to be
conducted. The Company is qualified or licensed and in good standing as a
foreign corporation in all jurisdictions where the nature of its business or
property makes such qualification or licensing necessary and the failure to be
so qualified or licensed could materially adversely affect the business,
earnings, prospects, properties or condition (financial or other) of the
Company.
3.2 Capitalization.
(a) Immediately prior to the Closing, the authorized capital stock
of the Company will consist of (i) fifteen million (15,000,000) shares of Common
Stock, one million nine thousand fifty three (1,009,053) shares of which are
issued and outstanding, and (ii) eleven million (11,000,000) shares of Preferred
Stock, eight hundred eighty thousand (880,000) shares of which are designated as
Series A Preferred Stock, all of which are issued and outstanding, two million
five hundred seventy thousand (2,570,000) shares of which are designated as
Series B Preferred Stock, two million five hundred twenty-three thousand three
hundred thirty-three (2,523,333) of which are issued and outstanding, three
million five hundred fifty thousand (3,550,000) shares of which are designated
as Series C Preferred Stock, one million nine hundred eleven thousand five
hundred thirty-four (1,911,534) of which are issued and outstanding, one million
three hundred thousand (1,300,000) shares of which are designated Series D
Preferred Stock, six hundred twenty five thousand and one (625,001) of which are
issued and outstanding, and two million five hundred thousand (2,500,000) shares
of which are designated Series E Preferred Stock, none of which were issued and
outstanding prior to the Closing. All issued and outstanding shares of the
Company's Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. Except for outstanding employee options as of June
30, 1999 to purchase a total of one million four hundred twenty-four thousand
four hundred twenty-three (1,424,423) shares of Common Stock, warrants to
purchase forty-six thousand six hundred sixty-six (46,666) shares of Series B
Preferred Stock, warrants to purchase seven hundred ten thousand nine hundred
seventeen (710,917) shares of Series C Preferred Stock and warrants to purchase
six hundred thousand (600,000) shares of Series D Preferred Stock, there are no
outstanding options, warrants or other rights to purchase from the Company any
of its securities.
(b) There are no outstanding rights, subscriptions, calls,
options, warrants, conversion rights or agreements granted or issued by or
binding upon the Company for the purchase or acquisition (contingent or
otherwise) from the Company of any shares of its capital stock or any other
securities except in accordance with the terms of this Agreement. The Company is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any share of its capital stock or any security
convertible into or exchangeable for any shares of its capital stock. No holder
of Common Stock or Preferred Stock or any other security of the Company or any
other person or entity is entitled to any preemptive right, right of first
refusal or similar right with respect to the issuance of the Securities or
otherwise, which has not been properly satisfied or waived. There is no voting
trust, agreement or arrangement among any of the beneficial holders of Common
Stock or Preferred Stock of the Company affecting the exercise of the voting
rights of such stock.
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(c) Attached in Part 3.2(c) of the Disclosure Schedule is a true
and complete list of the names and addresses of the record holders of all of the
outstanding Common Stock and Preferred Stock and other securities of the
Company. Such list attached contains a true and complete description of the
number of shares held by each such holder, the price paid per share and the form
of payment therefor. With respect to each outstanding option, such list sets
forth the date of grant, the number of shares subject thereto, the exercise
price, and vesting schedule. Such list also shows the current directors and
officers of the Company.
3.3 SUBSIDIARIES. The Company does not presently own, of record or
beneficially, or control, directly or indirectly, any capital stock or equity
interest in any corporation, association or business entity. The Company is not,
directly or indirectly, a participant in any joint venture or partnership.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Stockholders' Agreement, the performance
of all obligations of the Company hereunder at the Closing and the
authorization, sale, issuance and delivery of the Securities has been taken or
will be taken prior to the Closing. When issued in compliance with the
provisions of this Agreement, the Securities will be validly issued, fully paid
and nonassessable and will be free and clear of any preemptive rights, security
interests, claims, liens or encumbrances created by the Company. The Conversion
Shares have been duly and validly reserved for issuance and, when issued upon
conversion of the Series E Preferred Stock and exercise of the Warrants, will be
validly issued, fully paid and nonassessable and will be free and clear of any
preemptive rights, security interests, restrictions on transfer, claims, liens
or encumbrances other than restrictions under applicable and state securities
laws. This Agreement shall constitute the valid and binding obligation of the
Company enforceable in accordance with its terms.
3.5 CONSENTS AND APPROVALS. No filings with, notices to, or approvals
or authorizations of any governmental or regulatory body are required to be
obtained or made by the Company in connection with the consummation of the
transactions contemplated hereby. The Company has obtained all consents,
approvals or authorizations of, made all declarations or filings with, and given
all notices to, all federal, state or local governmental or public authorities
or agencies which are necessary for the continued conduct by the Company of its
business as now conducted or as proposed to be conducted in which the failure to
so obtain, make or give could materially adversely affect the business,
earnings, prospects, properties or condition (financial or other) of the
Company.
3.6 NO VIOLATIONS. The execution and delivery of this Agreement and the
performance by the Company of its obligations hereunder (i) do not and will not
conflict with or violate any provision of the Restated Certificate of
Incorporation or bylaws of the Company and (ii) do not and will not (a) conflict
with or result in a breach of the terms, conditions or provisions of, (b)
constitute a default under, (c) result in the creation of any encumbrance upon
the capital stock or assets of the Company pursuant to, (d) give any third party
the right to modify, terminate or accelerate any obligation under, (e) result in
a violation of, or (f) require any authorization, consent, approval, exemption
or other action by or notice to any court or administrative or
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governmental body or other third party pursuant to, any law, statute, rule or
regulation or any material agreement or instrument or any order, judgment or
decree to which the Company is subject or by which any of its assets are bound.
3.7 FINANCIAL STATEMENTS; INTERIM CHANGES. The Company has delivered to
each Purchaser (i) its audited balance sheet as at December 31, 1998 and audited
statement of income and cash flows for the twelve months ending December 31,
1998 and (ii) its unaudited balance sheet (the "LATEST BALANCE SHEET") as of May
31, 1999 (the "STATEMENT DATE") and unaudited statement of income for the five
month period ending on the Statement Date (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 and operating results of the Company
as of December 31, 1998 and the Statement Date; provided, however, that the
unaudited financial statements are subject to normal recurring year-end audit
adjustments (which are not expected to be material), and do not contain all
footnotes required under generally accepted accounting principles. Since the
Statement Date, there has not been any material adverse change in the business,
operations, financial condition or prospects of the Company. The Company has no
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) that are not either reflected or fully reserved against on the Latest
Balance Sheet or incurred in the ordinary course of business of the Company
subsequent to the date thereof in an amount not to exceed $100,000 in the
aggregate.
3.8 COMPLIANCE WITH LAWS. The Company's business has been conducted in
compliance with all applicable laws and regulations of governmental authorities,
except for such violations that have been cured or that, individually or in the
aggregate, may not reasonably be expected to have a material adverse effect on
the business, operations, financial condition or prospects of the Company.
3.9 PROPRIETARY RIGHTS. The Company has not received any communications
alleging that it has violated or, by conducting its business as proposed would
violate, any proprietary rights of any other person, nor is the Company aware of
any basis for the foregoing.
3.10 ACTIONS PENDING. There is no action, suit, proceeding or
investigation pending or, to the best knowledge of the Company, threatened in
writing against or affecting the Company or any of its respective properties or
rights before any court or by or before any governmental body or arbitration
board or tribunal. The foregoing includes, without limitation, actions pending
or threatened (or any basis therefor known to the Company) involving the prior
employment of any of the Company's employees, the 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, and none of its assets are
bound by, the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality or arbitrator or arbitration
panel. There is no action, suit, proceeding or investigation by the Company
currently pending or which the Company intends to initiate.
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3.11 MATERIAL CONTRACTS. Except as set forth on the Disclosure
Schedule, the Company is not a party to (and is not otherwise bound by) any of
the following: (i) any employment or consulting contract (including employee
benefit and welfare arrangements), (ii) any agreement providing for the issuance
or repurchase of any securities of the Company, (iii) any agreement in respect
of registration rights, preemptive rights, rights of first refusal, voting
rights or other rights of security holders, (iv) any agreement evidencing or
providing for any indebtedness for borrowed money, (v) any joint venture
contract or arrangement or other agreement involving a sharing of profits or
expenses to which the Company is a party; (vi) agreements limiting the freedom
of the Company to compete in any line of business or in any geographic area or
with any person; (vii) agreements providing for disposition of the business,
assets or shares of the Company, agreements of merger or consolidation to which
the Company is a party or letters of intent with respect to the foregoing; or
(viii) any other agreement that could reasonably be deemed material to the
Company.
3.12 INVESTMENTS IN UNITED STATES REAL PROPERTY INTERESTS. The
Company's capital stock does not constitute a United States real property
interest as that term is defined in Section 897(c)(1)(A)(ii) of the Internal
Revenue Code of 1986, as amended (the "Code"). The preceding representation is
based on a determination by the Company that the Company is not and has not been
a United States real property holding corporation (as that term is defined in
Section 897(c)(2) of the Code) during the five (5) year period preceding the
date of this letter. The Company shall use its best efforts to ensure that it
does not at any time in the future become a United States real property holding
corporation. If at any time in the future the Company should become a United
States real property holding corporation, the Company shall, as promptly as
possible, notify each Purchaser of such change in status.
3.13 UNRELATED BUSINESS TAXABLE INCOME. Any gross income derived by the
Purchasers from the Company shall be in the form of dividends, interest, capital
gains and losses from the disposition of property, and rents and royalties, but
only such rents and royalties as are excluded pursuant to Code Sections
512(b)(2) and 512(b)(3), respectively, in calculating unrelated business taxable
income and only such dividends, interest, capital gains and losses, and rents
and royalties that are not included under Section 512(b)(4) of the Code in
calculating unrelated business taxable income. This Section 3.12 shall not be
deemed to apply to (i) any compensation (in cash, stock or other form) received
by designees of the Purchasers in their capacities as directors of the Company
that is transferred to the Purchasers or (ii) any income included under Section
512(b)(4) of the Code as a result of acquisition indebtedness incurred by any
Purchaser in connection with the purchase of an interest in the Company.
3.14 QUALIFIED SMALL BUSINESS. To the best of its knowledge, the
Company qualifies as a "Qualified Small Business" as defined in Section 1202(d)
of the Code and covenants that so long as its shares are held by the Purchasers
(or a transferee in whose hands the shares are eligible to qualify as Qualified
Small Business Stock as defined in Section 1202(c) of the Code), it will use its
reasonable efforts to cause the shares to qualify as Qualified Small Business
Stock; provided that, notwithstanding the foregoing, the Company shall not be
obligated to take any action, or refrain from any action, which in its good
faith judgment is not in the best interests of the Company or its stockholders.
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3.15 DISCLOSURE. Neither this Agreement nor any schedule hereto, nor
any written disclosure document furnished by or on behalf of the Company to the
Purchasers or counsel to the Purchasers in connection with the transactions
contemplated by this Agreement, when read together, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any information
contained within any of the foregoing relating to future events or the projected
future financial performance of the Company, including any financial projections
or descriptions of potential strategic or business relationships between the
Company and third parties, except that the budget and financial projections
provided to the Purchasers (the "Financial Projections") were prepared in good
faith based on assumptions which the Company believes were reasonable at the
time the Financial Projections were prepared. As of the date of this Agreement,
to the Company's knowledge, each of the assumptions upon which the Financial
Projections were based remain reasonable.
3.16 PERMITS. The Company has all franchises, permits, licenses and
other authority necessary for its business as now being conducted and believes
it can obtain, without undue burden or expense, any similar authority for its
business as planned to be conducted. The Company is not in default in any
material respect under any such franchise, permit, license or other authority.
3.17 INTELLECTUAL PROPERTY.
(a) The Company owns or has sufficient rights to use, free and
clear of all liens, charges, claims, and restrictions, all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes and other intellectual property rights necessary to its
business as presently conducted.
(b) Since its organization, the Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all
intellectual property and all Inventions (as defined below). Since its
organization, each of the Company's employees, consultants, and independent
contractors, who, either alone or in concert with others, developed, invented,
discovered, derived, programmed or designed intellectual property or Inventions,
or who has knowledge of or access to information about intellectual property or
Inventions, has entered into a Proprietary Information Agreement set forth on
Exhibit F. As used herein, "INVENTIONS" means all inventions, developments and
discoveries which during the period of an employee's, consultant's, or
contractor's service to the Company he, she or it makes or conceives of, either
solely or jointly with others, that relate to any subject matter with which his,
her, or its work for the Company may be concerned, or relate to or are connected
with the business, products, services or projects of the Company, or relate to
the actual or demonstrably anticipated research or development of the Company or
involve the use of the Company's funds, time, material, facilities or trade
secret information.
(c) The Company is not aware that any of the Company's employees
or consultants is or will be in violation of his or her Proprietary Information
Agreement, and the Company shall use its best efforts to prevent any such
violation. The Company is not aware that
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any of the Company's employees, consultants or contractors are 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 conflict with his or her obligation to use his
or her best efforts to promote the interests of the Company. Neither the
execution nor delivery of this Agreement and the agreements contemplated
thereby, nor the carrying on of the Company's business by its employees,
consultants and contractors, nor the conduct of its business as proposed, 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 known to the
Company under which any of such employees, consultants or contractors is now
obligated. The Company does not believe it is or will be necessary to utilize
any inventions, copyrights, or other intellectual property of any of its
employees, consultants or contractors (or people it currently intends to hire)
made or owned prior to their employment with or engagement by the Company or
that it is or will be necessary to utilize any other assets or rights of any of
its employees, consultants or contractors (or people it currently intends to
hire) made or owned prior to their employment with or engagement by the Company,
in violation of any limitations or restrictions to which any such employee,
consultant or contractor is a party or to which any of such assets or rights may
be subject.
3.18 PATENTS AND OTHER INTANGIBLE ASSETS.
(a) Part 3.18(a) of the Disclosure Schedule summarizes all
patents, patent applications, trademarks, copyrights and other intellectual
property of the Company with a description of their scope.
(b) The Company (i) owns or has the right to use, free and clear
of all liens, claims and restrictions, all patents, patent applications,
trademarks, service marks, trade names, inventions, trade secrets, copyrights,
licenses and rights with respect to the foregoing, used in or necessary for the
conduct of its business as now conducted or proposed to be conducted, (ii) is
not infringing upon or otherwise acting adversely to the right or claimed right
of any person or entity under or with respect to any patent, trademark, service
xxxx, trade name, invention, trade secret, copyright, license or other
intellectual property or right with respect with respect thereto, and (iii) is
not obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner or licensee of, or other claimant to,
any patent, trademark, service xxxx, trade name, invention, trade secret, or
copyright with respect to the use thereof or in connection with the conduct of
its business or otherwise.
(c) The Company owns and has the unrestricted right to use all
product rights, manufacturing rights, trade secrets, including know-how,
negative know-how, formulas, patterns, compilations, programs, devices, methods,
techniques, processes, inventions, designs, computer programs and technical data
and all information that derives independent economic value, actual or
potential, from not being generally known or known by competitors and which the
Company has taken reasonable steps to maintain in secret (all of the foregoing
of which are collectively referred to herein as "INTELLECTUAL PROPERTY")
required for the development, manufacture, operation, and sale of all products
and services sold or proposed to be sold by the Company, free and clear of any
right, lien or claim of others, including without limitation former employers of
its employees, consultants and contractors, and current employers of employees,
consultants and
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contractors, where such employees, consultants or contractors are also employed
or under contract with another person.
(d) The Company has not sold, transferred, assigned, licensed or
subjected to any lien, security interest, or other encumbrance, any Intellectual
Property, trade secret, know-how, invention, design, process, computer program
or technical data, or any interest therein, necessary or useful for the
development, manufacture, use, operation or sale of any product or service
presently under development or manufactured, sold or rendered by the Company.
(e) No director, officer, employee, agent or stockholder of the
Company owns or has any right in the Intellectual Property of the Company, or
any patents, trademarks, service marks, trade names, copyrights, licenses or
rights with respect to the foregoing, or any inventions, developments or
discoveries used in or necessary for the conduct of the Company's business as
now conducted or as proposed to be conducted.
(f) The Company has no actual knowledge of any facts and has not
received any communication alleging or stating that the Company or any employee,
consultant or contractor has violated or infringed, or by conducting business as
proposed, would violate or infringe, any patent, trademark, service xxxx, trade
name, copyright, trade secret, proprietary right, process or other Intellectual
Property of any other person or entity; the Company has no knowledge of any
impediment whereby any employee, consultant or contractor who performs or is to
perform services of any kind for the Company that would interfere with such
person's ability to promote the business of the Company or would conflict with
the business or proposed Company business.
(g) Neither the execution nor delivery of this Agreement and the
agreements contemplated thereby, nor the carrying on of the Company's business
by its employees, consultants, and contractors nor the conduct of its business
as proposed, 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 known to the Company under which any of such employees, consultants
or contractors are now obligated.
(h) The Company has not granted any license to use its proprietary
information or Intellectual Property. The Company has not granted to any other
person or entity rights to license, market or sell its proposed products or
services and the Company is not bound by any agreement that affects the
Company's exclusive right to develop, license, market or sell its products or
services.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally and not jointly hereby represents and warrants
to the Company as follows:
4.1 REQUISITE POWER AND AUTHORITY. Such Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and the Stockholders' Agreement and to carry out their
respective provisions. All actions on such
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Purchaser's part required for the lawful execution and delivery of this
Agreement and the Stockholders' Agreement have been or will be effectively taken
prior to the Closing.
4.2 INVESTMENT REPRESENTATIONS. Such Purchaser understands that neither
the Securities nor the Conversion Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act"). Such Purchaser also
understands that the Securities are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
the Purchaser's representations contained in this Agreement.
(a) PURCHASER BEARS ECONOMIC RISK. Such 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. Such Purchaser must bear the economic
risk of this investment indefinitely unless the Securities (or the Conversion
Shares) are registered pursuant to the Securities Act, or an exemption from
registration is available. Such Purchaser understands that the Company has no
present intention of registering the Securities, the Conversion Shares or any
shares of its Common Stock. Such 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 such
Purchaser to transfer all or any portion of the Securities or the Conversion
Shares under the circumstances, in the amounts or at the times such Purchaser
might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Such Purchaser is acquiring the
Securities and the Conversion Shares for its own account for investment only,
and not with a view towards their distribution in violation of applicable
securities laws.
(c) PURCHASER CAN PROTECT ITS INTEREST. Such Purchaser represents
that, by reason of its or of its management's business or financial experience,
such Purchaser has the capacity to protect its own interests in connection with
the transactions contemplated in this Agreement. Further, such Purchaser is
aware of no publication of any advertisement in connection with the transactions
contemplated by the Agreement.
(c) ACCREDITED INVESTOR. Such Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Such Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with directors,
officers and management of the Company. Such 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. Such Purchaser acknowledges and agrees that the
Securities 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. Such 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
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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, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(g) 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. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS
The obligation of each Purchaser to purchase and pay for the Securities
to be delivered to it at the applicable Closing shall be subject to the
satisfaction of the following conditions as of each Closing Date:
5.1 with respect to the First Closing, the representations and
warranties made by the Company in Section 3 hereof shall be true and correct as
of such Closing Date with the same force and effect as if they had been made as
of such 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 such
Closing. With respect to the Second Closing, the Company shall have delivered an
updated Disclosure Schedule, and the representations and warranties made by the
Company in Section 3 hereof, as modified by the Disclosure Schedule, shall be
true and correct as of such 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 such Closing;
5.2 (a) at the First Closing, the Purchasers shall have received the
legal opinion of Xxxxxx Godward LLP, counsel to the Company, in the form of
Exhibit E hereto (the "Opinion"), and (b) at the Second Closing, the Purchasers
shall have received the legal opinion of Xxxxxx Godward LLP, counsel to the
Company, set forth in paragraph 5 of the Opinion;
5.3 concurrently with the Closing, the Company, the Purchasers and the
existing stockholders of the Company shall have entered into the Third Amended
and Restated Stockholders Agreement in the form attached hereto as Exhibit D;
5.4 at the First Closing, the Company shall have provided to Centennial
Fund IV, L.P. ("CENTENNIAL") a certification of the direct and indirect holdings
of securities of the Company by certain persons designated by Centennial as
required by Centennial's governing documents;
5.5 all other Purchasers shall have concurrently purchased the
Securities to be purchased by them at each Closing pursuant to this Agreement;
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5.6 all corporate and legal proceedings taken by the Company in
connection with the transactions contemplated by this Agreement and all
documents relating to such transactions shall be satisfactory to each of the
Purchasers and to its counsel. At the Second Closing, the Company shall have
delivered to Purchasers a certificate, executed on behalf of the Company by the
President of the Company, dated as of such Closing Date, certifying as to the
fulfillment of the conditions specified in Section 5.1.
6. EXPENSE REIMBURSEMENT
The Company shall reimburse the reasonable fees and expenses of Holme
Xxxxxxx & Xxxx LLP, counsel to the Purchasers, incurred in connection with the
negotiation, execution, delivery and performance of this Agreement, in an amount
not to exceed $15,000; provided that, the Company shall have received an
itemized xxxx of such fees and expenses. The Company agrees to reimburse the
reasonable fees of counsel and out-of-pocket expenses incurred by the Purchasers
in connection with the enforcement, in a legal proceeding against the Company,
of the rights and remedies of the Purchasers hereunder and under the
Stockholders' Agreement and the Restated Certificate (excluding Article Eleven
thereof) if the Purchasers, either individually or collectively, are the
prevailing party or parties in any such proceeding.
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, except that
the General Corporation Law of the State of Delaware shall govern as to matters
of corporate law.
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 Securities from time to time.
7.4 ENTIRE AGREEMENT. This Agreement, and any amendment hereto, the
Exhibits and the other documents delivered pursuant hereto or pursuant to any
such amendment, including the Stockholders Agreement, and any amendment thereto,
constitute the full and entire understanding and agreement among 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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7.5 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent possible, be modified
in such manner as to be valid, legal, and enforceable but so as to most nearly
retain the intent of the parties, and if such modification is not possible, such
provision shall be severed from this Agreement, and in either case the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified
only upon the mutual written consent of the Company and each of the Purchasers
at the First Closing.
7.7 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, special next day delivery, with
verification of receipt. All communications shall be sent to the Company at 000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 and to a 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.
7.8 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.
7.9 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. 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 any such fee or commission payable by such
indemnifying party.
7.10 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 who acquires Securities 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
Securities and Conversion Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed the Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
XXXXXXX.XXX INC.
By: /s/ E. Xxxxxx Xxxxxx
-----------------------------------------
Title: President and CEO
--------------------------------------
PURCHASERS:
GLOBAL RETAIL PARTNERS, L.P.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------------
Title: Vice President
--------------------------------------
DLJ DIVERSIFIED PARTNERS, L.P.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------------
Title: Vice President
--------------------------------------
DLJ DIVERSIFIED PARTNERS-A, L.P.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------------
Title: Vice President
--------------------------------------
GRP PARTNERS, L.P.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------------
Title: Vice President
--------------------------------------
GLOBAL RETAIL PARTNERS FUNDING, INC.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------------
Title: Vice President
--------------------------------------
DLJ ESC II L.P.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------------
Title: Vice President
--------------------------------------
CENTENNIAL FUND IV, L.P.
By: Centennial Holdings IV, L.P.
-----------------------------------------
Its: General Partner
----------------------------------------
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: General Partner
------------------------------------
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TRIBUNE COMPANY
By: /s/
-----------------------------------------
Title: President, Tribune Ventures
--------------------------------------
BOULDER VENTURES II, L.P.
By: BV Partner II, LLC
By: /s/
-----------------------------------------
Title: Managing Member
--------------------------------------
/s/
-----------------------------------------
E. Xxxxxx Xxxxxx, Xx.
/s/
-----------------------------------------
Xxxxxxx Xxxxxxxxx
GOLIEB FAMILY TRUST
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxxxx Xxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxxx Xxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
JLS LLC
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
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Xxxxxx Xxxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxxx Xxxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxxx Xxxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxx Xxxxxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Trisun Financial
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
WILL'S WEI CORP.
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxxx Xxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
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/s/
--------------------------------------------
Xxxx Xxxxxxx
/s/
--------------------------------------------
Xxxxxx Xxxxxxx
250 VC ASSOCIATES
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
/s/
--------------------------------------------
Xxxxxx Xxxxxxx
250 VC ASSOCIATES
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxxx Xxxxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
XXXXXXXXX FAMILY LLC
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
Xxxx Xxxxxx
By: BV Partners LLC, Attorney-in-Fact
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Title: Managing Member
--------------------------------------
/s/ Xxxxx Xxxxxx
--------------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
--------------------------------------------
Xxxxxx Xxxxx
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EXHIBIT A
SCHEDULE OF PURCHASERS
19
SERIES E STOCK AND WARRANT PURCHASE AGREEMENT
EXHIBIT B
FORM OF WARRANT
20
SERIES E STOCK AND WARRANT PURCHASE AGREEMENT
EXHIBIT C
RESTATED CERTIFICATE OF INCORPORATION
21
SERIES E STOCK AND WARRANT PURCHASE AGREEMENT
EXHIBIT D
FORM OF THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
22
SERIES E STOCK AND WARRANT PURCHASE AGREEMENT
EXHIBIT E
FORM OF LEGAL OPINION
23
SERIES E STOCK AND WARRANT PURCHASE AGREEMENT
EXHIBIT F
FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
