Exhibit 10.1
EXECUTION COPY
24/7 REAL MEDIA, INC.
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
This SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
made as of September 19, 2002, by and among 24/7 Real Media, Inc., a Delaware
corporation (the "COMPANY") and the parties listed on the Schedule of Purchasers
attached to this Agreement as EXHIBIT A (each purchaser hereinafter individually
referred to as a "PURCHASER" and collectively as the "PURCHASERS").
RECITALS
WHEREAS, the Company desires to sell and the Purchasers desire to
purchase shares of the Company's Series B Preferred Stock, par value $0.01 per
share (the "SERIES B STOCK").
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration the receipt and
adequacy of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF STOCK
1.1 AUTHORIZATION. As of the Closing (as defined below), the
Company will have authorized the issuance and sale to the Purchasers, pursuant
to the terms of this Agreement, of 125,000 shares of the Series B Stock having
the powers, designations, preferences, voting rights, relative and other special
rights, and the qualifications, limitations and restrictions set forth in the
resolutions of the Company's Board of Directors (the "BOARD") attached hereto as
EXHIBIT B (the "SERIES B DESIGNATION").
1.2 AGREEMENT TO PURCHASE AND SELL STOCK. Subject to the terms
and conditions of this Agreement including, without limitation, the satisfaction
(or waiver) of the conditions set forth in Sections 4.1 and 5.1 below, each
Purchaser agrees to purchase from the Company at the Closing, and the Company
agrees to issue and sell to each Purchaser at the Closing, the number of shares
of Series B Stock set forth beside such Purchaser's name on EXHIBIT A hereto, at
a price per share equal to Ten Dollars ($10.00), for an aggregate purchase price
of $1,250,000 (the "PURCHASE PRICE"), based on an initial conversion price of
$0.2066 per share. The shares of Series B Stock issued and sold to the
Purchasers at the Closing are referred to herein as the "SERIES B SHARES." The
shares of the Company's common stock, par value $0.01 per share ("COMMON STOCK")
issuable upon conversion of the Series B Stock is referred to herein as the
"CONVERSION STOCK." The Series B Shares and Conversion Stock are sometimes
collectively referred to herein as the "SECURITIES."
1.3 CLOSING. The closing of the purchase and sale of the
Series B Shares hereunder shall be held at the law offices of counsel to the
Company, Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at 10:00
a.m. local time promptly following the satisfaction (or waiver) of the
conditions set forth in Sections 4.1 and 5.1 hereof (other than conditions which
will be satisfied at, but not before, the Closing) or at such other time and
place as the Company and Purchasers purchasing a majority of the Series B Shares
mutually agree (which time and place are designated as the "CLOSING").
1.4 DELIVERY. Subject to the terms of this Agreement, at the
Closing, the Company shall deliver to each Purchaser a certificate representing
the number of Series B Shares purchased by such Purchaser against payment to the
Company of the aggregate Purchase Price for the Series B Shares so purchased by
check or wire transfer of immediately available funds to such account as may be
designated by the Company no later than 12:00 p.m. New York Time on the business
day preceding the Closing.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchasers, as of the date of this
Agreement and as of the Closing, and except as set forth with reasonable
specificity on the Disclosure Letter delivered to Purchasers concurrently with
this Agreement (the "DISCLOSURE LETTER"), as follows:
2.1 ORGANIZATION AND STANDING: CERTIFICATE OF INCORPORATION
AND BYLAWS. The Company is a corporation duly organized and validly existing
under the laws of the State of Delaware, is in good standing under such laws and
is authorized to exercise all of its corporate powers, rights and privileges.
The Company has the requisite corporate power and authority to own, lease and
operate its properties and assets and to conduct its business as presently
conducted, other than such corporate power and authority, the absence of which
would not reasonably be expected to cause a Material Adverse Effect. A MATERIAL
ADVERSE EFFECT means any material adverse effect on the business, properties,
assets, operations, results of operations or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole, or on the Company's
ability to consummate the transactions contemplated hereby or to enter into the
agreements and instruments to be entered into in connection herewith, or on the
authority or ability of the Company to perform its obligations under this
Agreement and the Investor's Rights Agreement substantially in the form of
EXHIBIT C hereto (the "INVESTORS' RIGHTS AGREEMENT" and, together with this
Agreement, the "FINANCING AGREEMENTS"). The Company is qualified to do business
as a foreign corporation in each jurisdiction where the failure to be so
qualified would reasonably be expected to cause a Material Adverse Effect. True,
correct and complete copies of the Company's Certificate of Incorporation and
Bylaws, each as will be in effect at the Closing, have been delivered to counsel
for the Purchasers.
2.2 CORPORATE POWER; AUTHORIZATION.
(a) The Company has the requisite corporate power to
execute and deliver the Financing Agreements, to issue and sell the Series B
Shares hereunder, to execute and file the Series B Designation (the "CERTIFICATE
OF DESIGNATION") and to carry out and perform its obligations under the terms of
the Financing Agreements and the Certificate of Designation.
(b) All corporate action on the part of the Company,
its stockholders, officers and directors necessary for the authorization,
execution, delivery and performance of the Financing Agreements and the
Certificate of Designation and for the authorization, sale, issuance (or
reservation for issuance) and delivery of the Securities, and the performance of
the Company's obligations hereunder and thereunder, has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes,
and the Investors' Rights Agreement when executed and delivered will constitute,
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application affecting the enforcement of creditors' rights. The
Certificate of Designation has been filed prior to the Closing with the
Secretary of State of the State of Delaware and will be in full force and
effect, enforceable against the Company in accordance with their terms and shall
not have been amended unless in compliance with their terms.
2.3 SUBSIDIARIES. Each of the subsidiaries of the Company
listed on Schedule 2.3 of the Disclosure Letter (the "SUBSIDIARIES") is validly
existing, and the Company is the sole record and beneficial owner of the all of
the capital stock of each of the Subsidiaries. There is no obligation or
commitment of the Company or any Subsidiary to issue shares, options, warrants
or other rights with respect to any Subsidiary to any person. The Company has no
affiliated companies other than the Subsidiaries and does not otherwise own or
control, directly or indirectly, any material equity interest in any other
corporation, partnership, association or other business entity except as
disclosed in the Financial Statements (as defined below). The Company is not a
party to any material partnership or joint venture.
2.4 CAPITALIZATION.
(a) The authorized capital stock of the Company
consists of (A) 140,000,000 shares of Common Stock, of which 52,005,617 are
issued and outstanding as of the date hereof and (B) 10,000,000 shares of
Preferred Stock, $0.01 par value per share (the "PREFERRED STOCK"), of which
160,000 shares are issued and outstanding, and of which 800,000 shares are
designated as Series A Stock and 340,000 shares are designated as Series A-1
Stock. All such issued and outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, and were issued
in compliance with all applicable federal and state securities laws. Except as
set forth in the Financing Agreements or in Schedule 2.4 of the Disclosure
Letter, and except for 11,386,547 shares of Common Stock reserved for issuance
under the Company's 1998 Stock Incentive Plan, of which 8,301,509 shares are
subject to outstanding options issued under such plan and 1,023,162 shares have
been issued and are included in the issued and outstanding Common Stock number
listed in the preceding sentence; 2,500,000 shares of Common Stock reserved for
issuance under the Company's 2001 Stock Incentive Plan for Non-Officers, of
which 2,176,184 shares are subject to outstanding options issued under such plan
and 5,188 shares have been issued and are included in the issued and outstanding
Common Stock number listed in the preceding sentence; 1,250,000 shares of Common
Stock reserved for issuance under the Company's 2001 Equity Compensation Plan,
of which 1,250,000 shares have been issued and are included in the issued and
outstanding Common Stock number listed in the preceding sentence; 3,000,000
shares of Common Stock reserved for issuance under the Company's 2002 Equity
Compensation Plan, of which 248,397
shares have been issued and are included in the issued and outstanding Common
Stock number listed in the preceding sentence; and 4,020,412 shares of Common
Stock issuable upon the exercise of the warrants listed in Schedule 2.4 of the
Disclosure Letter, (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights; (ii) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Company or by which the Company is or
may become bound; (iv) there are no amounts outstanding under, and there will be
no amounts due upon termination of, any credit agreement or credit facility; (v)
there are no financing statements securing obligations in any amounts greater
than Five Hundred Thousand Dollars ($500,000) in the aggregate, filed in
connection with the Company; (vi) there are no agreements or arrangements under
which the Company is obligated to register the sale of any of its securities
under the Securities Act; (vii) there are no outstanding securities or
instruments of the Company or which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may become bound to redeem a security of
the Company; (viii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (ix) the Company does not
have any stock appreciation rights or "phantom" stock plans or agreements or any
similar plan or agreement.
(b) ISSUANCE OF SECURITIES. As of the Closing, the
Series B Shares will have been duly authorized and, upon issuance in accordance
with the terms hereof, shall be (i) validly issued, fully paid and
non-assessable, (ii) free from all taxes, liens and charges with respect to the
issuance thereof and (iii) entitled to the rights and preferences set forth in
the Certificate of Designation. As of the Closing, at least 6,050,339 shares of
Common Stock will have been duly authorized and reserved for issuance upon
conversion of the Series B Shares. Upon conversion of the Series B Shares in
accordance with the Series B Designation, the shares of Conversion Stock shall
be (i) validly issued, fully paid and non-assessable, (ii) free from all taxes,
liens and charges with respect to the issuance thereof and (iii) subject to the
terms and provisions of the Financing Agreements, entitled to the rights
accorded to a holder of Common Stock. Subject to the accuracy of the
representations and warranties of each of the Purchasers in this Agreement, the
issuance by the Company of the Securities is exempt from registration under the
Securities Act and applicable state securities laws, and the Securities will be
issued in compliance with all applicable state and federal securities laws.
Except as provided in the Investors' Rights Agreement, the issuance of the
Securities is not (and will not be) subject to any preemptive rights or rights
of first refusal. Upon the Closing, each share of Series B Stock shall be
convertible pursuant to the terms of the Series B Designation into 48.40271
shares of Common Stock.
2.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and
documents required to be filed by the Company with the Securities and Exchange
Commission (the "SEC") since the filing of the Company's annual report on Form
10-K for the year ended December 31, 2000. All such forms, reports and
documents, including the Company's annual report on Form 10-K for the year ended
December 31, 2001, are referred to herein as the "COMPANY SEC REPORTS." As of
their respective dates, each of the Company SEC Reports, as of the date filed
and as they may have been subsequently amended, (i) were prepared in accordance
with all requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports, and (ii) did not contain any untrue
statement of a material fact or did not omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. All
material agreements to which the Company or any of its Subsidiaries is a party
or to which the property or assets of the Company or any of its Subsidiaries are
subject are included as part of or specifically identified in the Company SEC
Reports or have been specifically identified as material agreements on SCHEDULE
2.5(a) of the Disclosure Letter, and made available, to counsel to the
Purchasers.
(b) Each of the financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports
(collectively, the "FINANCIAL STATEMENTS") (i) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and with each other, and (iii) fairly presented the financial position
of the Company at the respective dates thereof and for the periods indicated
therein, except in the case of unaudited quarterly financial statements for the
omission of certain footnotes and subject to normal and recurring year-end
adjustments. The unaudited financial statements of the Company for the period
ending June 30, 2002, in the form provided to the Purchasers (the "UNAUDITED
6/30/02 FINANCIAL STATEMENTS"), (i) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated and with each other, and (ii) represented in
all material respects the financial position of the Company at the respective
dates thereof and for the periods indicated, except for the omission of
footnotes and statement of cash flows and subject to normal and recurring
year-end adjustments. Except as set forth in the Unaudited 6/30/02 Financial
Statements or specifically identified in the Company SEC Reports, the Company
has no liabilities, contingent or otherwise, other than obligations and
commitments incurred in the ordinary course of business that are not required
under generally accepted accounting principles to be reflected in the Unaudited
6/30/02 Financial Statements, in each case which, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company. The Company is not aware of any material liability of any nature,
direct or indirect, contingent or otherwise, or any amount not adequately
reflected or reserved against in the Unaudited 6/30/02 Financial Statements and
notes thereto.
(c) The Company satisfies the requirements for use of
Form S-3 for registration of the resale of Registrable Securities (as defined in
the Investors' Rights Agreement). The Company is not required to file and, if it
were to file a registration statement on Form S-3 on the date hereof, would not
be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into prior to the date hereof and to which the Company is a
party or by which the Company is bound which has not been previously filed as an
exhibit to its reports filed with the SEC. To the knowledge of the Company,
except for the issuance of the Series B Shares contemplated by this Agreement,
no event, liability, development or circumstance has occurred or exists, or is
currently contemplated to occur, with respect to the Company or its business,
properties, operations, prospects or financial condition, that would be required
to be disclosed by the Company under applicable securities laws or the rules and
policies of Nasdaq and the Company's listing agreement with Nasdaq, and which
has not been publicly disclosed.
2.6 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company
and its Subsidiaries have good and marketable title to, or in the case of leased
properties and assets, valid and enforceable leaseholds or licensed interests
in, all of their respective material properties and assets. Such properties and
assets are not subject to any material mortgage, pledge, lien, security
interest, conditional sales agreement, encumbrance or charge, except liens for
current taxes not yet due and payable and mechanics liens incurred in the
ordinary course of business. The material properties and assets of the Company
and its Subsidiaries are in good condition and repair in all material respects.
Except as disclosed in Schedule 2.6 of the Disclosure Letter, such material
properties and assets constitute all of the material properties and assets,
tangible and intangible, of any nature whatsoever, necessary to operate the
Company's business as it is currently being operated.
2.7 INTELLECTUAL PROPERTY RIGHTS. The Company and its
Subsidiaries (a) own or have sufficient right to use, free and clear of all
liens, claims and restrictions, all material patents, trade secrets, inventions,
know-how, designs, processes, technical data, trademarks, service marks, trade
names, copyrights and other intangible or intellectual property rights
("INTELLECTUAL PROPERTY RIGHTS") (and licenses with respect to the foregoing)
needed for or used in the conduct of its business as now conducted and as
proposed to be conducted (as set forth in the SEC Reports) without infringing
upon or otherwise acting adversely to the right or claimed right of any person
or entity under or with respect to any of the foregoing, and (b) are not
obligated or under any liability whatsoever to make any material payments by way
of royalties, fees or otherwise to any owner of, licensor of, or other claimant
to, any Intellectual Property Right, with respect to the use thereof or in
connection with the conduct of their businesses. Neither the Company nor any of
its Subsidiaries are infringing upon or otherwise acting adversely to the right
or, to the Company's knowledge, claimed right of any person under or with
respect to any Intellectual Property Right. The Company has not received any
written or, to the actual knowledge of any directors or executive officers of
the Company, other communications alleging that the Company or any of its
Subsidiaries have violated any Intellectual Property or other proprietary right
of any other person or entity, which, singly or in the aggregate, if the subject
of any unfavorable decision, ruling or finding, would reasonably be expected to
cause a Material Adverse Effect. The Company has no knowledge of any third party
that is infringing or improperly using any Intellectual Property Right held by
the Company or any of its Subsidiaries, and except as disclosed in the Company
SEC Reports neither the Company nor any of its Subsidiaries have instituted any
action, suit or proceeding in which an act constituting an
infringement of any such Intellectual Property Right was alleged to have been
committed by a third party. There is no claim, action or proceeding being made
by the Company or any of its Subsidiaries regarding any of the foregoing
Intellectual Property Rights of the Company or any of its Subsidiaries or
brought or, to the Company's knowledge, threatened against the Company or any of
its Subsidiaries regarding any of the foregoing Intellectual Property Rights of
the Company or any of its Subsidiaries, or the use of any Intellectual Property
Rights of any third party by the Company or any of its Subsidiaries that, if the
subject of an unfavorable decision, ruling or finding would reasonably be
expected to cause a Material Adverse Effect.
2.8 PROPRIETARY INFORMATION AGREEMENTS. All current and former
employees and consultants of the Company and its Subsidiaries that have or are
reasonably expected to contribute to the development of the products or
technology of the Company and/or its Subsidiaries are parties to a written
confidentiality and invention and proprietary rights assignment agreement
substantially in the form previously delivered to counsel for the Purchasers,
except where the Company's failure to obtain such agreements, in any single case
or in the aggregate, should not be reasonably expected to adversely affect the
assets, properties, financial condition, operating results or business of the
Company. To the Company's knowledge, none of the current or former employees of
the Company or any of its Subsidiaries is, or is alleged to be, in material
violation of any employment agreement, non-competition agreement, invention or
proprietary information disclosure agreement, or other contract or agreement to
which any of them is a party which violation or alleged violation relates to
their relationship to the Company, its Subsidiaries, their businesses or
operations, or is in material violation of the Confidentiality and Inventions
Agreement with the Company or any of its Subsidiaries to which such employee is
a party. None of the employees of the Company or its Subsidiaries, to the
Company's knowledge, has taken, removed or made use of any material proprietary
documentation, manuals, products, materials, or any other tangible item from his
or her previous employer, and the Company and its Subsidiaries has not and will
not make use of any such material proprietary items in the business of the
Company. The Company and its Subsidiaries have taken all commercially reasonable
steps to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, any of the Intellectual Property Rights of the Company
and its Subsidiaries.
2.9 PRIVACY. The Company and its Subsidiaries have obtained
any and all necessary consents from customers with regard to their collection
and dissemination of personal customer information in accordance in all material
respects with any applicable privacy policy published or otherwise communicated
by Company and any applicable laws, rules or regulations. The practices of the
Company and its Subsidiaries regarding the collection and use of personal
customer information are and have been in all material respects in accordance
with such privacy policies and with all applicable laws, rules or regulations.
The use of the current products and services of the Company and its Subsidiaries
by customers for the intended purposes of such products and services, as
described in the Company SEC Reports and in the product documentation of the
Company and its Subsidiaries, does not violate any laws, rules or regulations
regarding the collection, use or disclosure of personal information in any
material respect.
2.10 GOVERNMENTAL PERMITS. The Company and its Subsidiaries
have all governmental permits, operating authority, licenses, franchises,
certificates, consents, rights and privileges as are necessary to the operation
of their businesses as currently conducted, the absence of which would
reasonably be expected to cause a Material Adverse Effect (collectively,
"PERMITS"). Such Permits are in full force and effect, no material violations
have been or are expected to have been recorded in respect of any such Permits,
and no material proceeding is pending or threatened that could result in the
revocation or limitation of any of such Permits. The Company has not received
any written notice of proceedings relating to the revocation or modification of
any such Permits. The Company and its Subsidiaries have conducted their
businesses in material compliance with all Permits.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS; NO CONFLICTS. The
Company and its Subsidiaries are not in violation, breach or default of any term
of their respective certificates of incorporation or bylaws, or, in any material
respect, of any term or provision of any material mortgage, indenture, contract,
agreement or instrument to which the Company or any of its Subsidiaries is a
party, or of any provision of any foreign or domestic state or federal judgment,
decree, order statute, rule or regulation applicable to or binding upon the
Company or any of its Subsidiaries other than such violation, breach or default
which has not caused and would not reasonably be expected to cause a Material
Adverse Effect. The execution, delivery and performance of the Financing
Agreements by the Company, and the consummation by the Company of the
transactions contemplated hereby and thereby, the performance by the Company of
its obligations under the Certificate of Designation, and the issuance of the
Securities have not and will not (with or without notice or lapse of time, or
both): (a) conflict with or violate, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, mortgage, indenture or instrument (including, without
limitation, any stock option, employee stock purchase or similar plan or any
employment or similar agreement) to which the Company or any of its Subsidiaries
is a party (including, without limitation, triggering the application of any
change of control or similar provision (whether "single trigger" or "double
trigger")); (b) violate any provision of the certificates of incorporation or
bylaws of the Company or any of its Subsidiaries; (c) result in the creation of
any material mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or any of its Subsidiaries, or result in the
suspension, revocation, impairment, forfeiture or non-renewal of any material
Permit applicable to the operations or assets of the Company or any of its
Subsidiaries; or (d) result in a violation by the Company or any of its
Subsidiaries of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of NASDAQ). The business of the Company and its Subsidiaries is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, which violation would reasonably be expected to cause a Material Adverse
Effect on the Company. The Company is not in violation of the listing
requirements of NASDAQ or its listing agreement with Nasdaq.
2.12 LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the Company's knowledge, overtly threatened in
writing or, to the actual knowledge of any directors or executive officers of
the Company, by other means against the Company or any of its Subsidiaries or
its or their properties before any court, governmental
agency, public board or self-regulatory organization (other than ordinary course
litigation that, if determined adversely to the Company, would not be reasonably
be expected to cause a Material Adverse Effect).
2.13 EMPLOYEES. The Company SEC Reports accurately describe,
as of the date of this Agreement, the employee benefit plans and arrangements of
the Company and its Subsidiaries therein described. Except as disclosed in the
Company SEC Reports, neither the Company nor any of its Subsidiaries is bound by
or subject to (and none of its or their assets is bound by or subject to) any
arrangement with any labor union and neither the Company nor any of its
Subsidiaries has any collective bargaining agreements covering any of its
employees. There is no pending or, to the best of the Company's knowledge,
threatened union organizing effort or labor dispute involving the Company or any
of its Subsidiaries and any group of its or their employees. Subject to
applicable law and to the terms of employment agreements described in Schedule
2.13, copies of which have been provided to the Purchasers, the employment of
each officer and employee of the Company or any of its Subsidiaries is
terminable at the will of the Company. The Company and its Subsidiaries are in
compliance in all material respects with all federal, state, local and foreign
laws and regulations respecting employment and employment practices, terms and
conditions of employment, wages and hours, equal employment opportunity and with
other laws related to employment. No executive officer (as defined in Rule
501(f) of the Securities Act) has notified the Company that such officer intends
to leave the Company or otherwise terminate such officer's employment with the
Company.
2.14 INSURANCE. The Company has obtained and maintains in full
force and effect fire, casualty, directors' and officers' liability and other
and liability insurance policies with recognized insurers with such coverages as
are customary for companies in businesses similarly situated. The Company has
not been refused any insurance coverage sought or applied for and has no reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that is not
materially in excess of current levels.
2.15 MATERIAL CONTRACTS AND OBLIGATIONS.
(a) Except for the contracts and agreements filed as
exhibits to the Company SEC Reports, Schedule 2.15(a) of the Disclosure Letter
contains a complete list of all contracts to which the Company or any of its
Subsidiaries are a party, or to which any of their respective assets or
properties are subject, in each case which are, or would reasonably be expected
to become, significant or material to the business, assets, liabilities,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole.
(b) There are no existing, pending or, to the actual
knowledge of any directors or executive officers of the Company, threatened
claims for indemnification with respect to infringement or misappropriation (or
alleged or potential infringement or misappropriation) of intellectual property
rights under any material agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries
is bound, except for claims arising after December 31, 2001 that have been
settled, satisfied or otherwise resolved in full prior to the date hereof.
(c) Neither the Company nor any of its Subsidiaries,
nor, to the Company's knowledge, is any other party in default under or material
violation of any contract listed on Schedule 2.15(a) of the Disclosure Letter or
referenced in Section 2.15(a) to which the Company or any of its Subsidiaries is
a party.
2.16 TAX RETURNS AND PAYMENTS. The Company and its
Subsidiaries have accurately prepared and timely filed all tax returns (foreign,
federal, state and local) required to be filed by them or obtained extensions
therefor. All taxes shown to be due and payable on said returns, any assessments
received, and all other taxes due and payable by the Company or any of its
Subsidiaries on or before the date hereof have been paid or will be paid prior
to the time they become delinquent. The federal income and state income
franchise tax, sales or use tax returns of the Company and its Subsidiaries have
not been audited by any governmental authority since January 1, 2001. No
material deficiency assessment or proposed adjustment of the Company's or any of
its Subsidiaries' foreign or federal income tax or state or local taxes is
pending and the Company has no knowledge of any proposed material liability for
any tax to be imposed upon its properties or assets for which the Company has
not adequately reserved. The provision for taxes of the Company and its
Subsidiaries as shown in the Financial Statements is materially adequate for
taxes due or accrued as of the date thereof. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended (the "CODE"), to be
treated as a collapsible corporation pursuant to Section 1362(a) or Section
341(f) of the Code and has not made any other elections pursuant to the Code
(other than elections which relate solely to methods of accounting, depreciation
or amortization) which would reasonably be expected to cause a Material Adverse
Effect on the Company.
2.17 NO OTHER AGREEMENTS RELATING TO VOTING OR TRANSFER.
Except as contemplated by the Financing Agreements, the Certificate of
Designation and the Company's Certificate of Incorporation, there is no
agreement between the Company, any of its Subsidiaries, or any of officers or
directors of the Company or any of its Subsidiaries, that directly affects or
relates to the voting of or giving of consents or approvals with respect to any
voting security.
2.18 CERTAIN TRANSACTIONS. Except as disclosed in the Company
SEC Reports, (i) the Company and its Subsidiaries are not directly or indirectly
indebted to any officers or directors of the Company or any of its Subsidiaries,
or to any member of his or her immediate family, in any amount whatsoever, or to
any holder of more than five percent (5%) of the Company's outstanding Common
Stock, (ii) no holder of more than five percent (5%) of the Company's
outstanding Common Stock or any of the Company's Subsidiaries, or officer or
director of the Company or any of its Subsidiaries, or member of his or her
immediate family, has incurred any indebtedness for borrowed money, or incurred
any other liabilities, to the Company or any of its Subsidiaries, of greater
than $60,000, or, to the knowledge of the Company, has any direct or indirect
ownership interest in any firm or corporation with which the Company or any of
its Subsidiaries has a business relationship, or any firm or corporation that
currently directly competes with the Company or any of its Subsidiaries (except
with respect to any interest in less than one percent of the stock of any
corporation whose stock is publicly traded), (iii) none of the
officers or directors of the Company and its Subsidiaries, or member of his or
her immediate family, is directly or indirectly interested in or party to any
contract or commercial or financial relationship with the Company or any of its
Subsidiaries with a value exceeding $100,000, and (iv) the Company and its
Subsidiaries are not guarantors or indemnitors of any material indebtedness of
any other person, firm or corporation.
2.19 CHANGES. Since June 30, 2002 there has not been:
(a) any development, condition or circumstance which
has had or should reasonably be expected to have a Material Adverse Effect;
(b) any material damage, destruction or loss, whether
or not covered by insurance, materially and adversely affecting the assets,
properties, financial condition, operating results or business of the Company or
any of its Subsidiaries (as such business is presently conducted);
(c) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company or any of its
Subsidiaries, except in the ordinary course of business;
(d) any waiver by the Company or any of its
Subsidiaries of a material right or of a material debt owed to it;
(e) any change or amendment to a material contract or
material arrangement by which the Company, any of its Subsidiaries or any of its
assets or properties is bound or subject, except in the ordinary course of
business which have not been in the aggregate materially adverse;
(f) any material change in any compensation
arrangement or agreement with any officer, or any employee or group of employees
who receive, in the aggregate, a material amount of cash, options and other
remuneration under such arrangement(s) or agreement(s), of the Company or any of
its Subsidiaries;
(g) any sale, assignment, license or transfer of any
patents, trademarks, copyrights, trade secrets or other intangible assets of the
Company or any of its Subsidiaries other than non-exclusive licenses in the
ordinary course of business;
(h) any resignation or termination of employment of
any officer of the Company or any of its Subsidiaries; and the Company does not
know of the impending resignation or termination of employment of any such
officer;
(i) to the actual knowledge of any director or
executive officer of the Company, receipt of notice that there has been a loss
of, or order cancellation by, any major customer of the Company or any of its
Subsidiaries;
(j) any loans made by the Company or any of its
Subsidiaries to or for the benefit of its employees, officers or directors, or
any members of their immediate families in
excess of $250,000 individually or in the aggregate, other than travel advances
and other advances made in the ordinary course of its business, or any
guarantees made by the Company or any of its subsidiaries to or for the benefit
of any of the foregoing persons other than in the ordinary course;
(k) any declaration, setting aside or payment or
other distribution in respect of any of the Company's capital stock, or any
direct redemption, purchase or other acquisition of any of such stock by the
Company or any of its Subsidiaries;
(l) any other event or condition of any character
that the Company believes would reasonably be expected to cause a Material
Adverse Effect; or
(m) any agreement or commitment by the Company or any
of its Subsidiaries to do any of the things described in this Section 2.19.
2.20 EMPLOYEE BENEFIT PLANS. The Company and its Subsidiaries
have materially complied with all applicable material local, state and federal
regulations with respect to each employment contract, deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement
and employee benefit plan subject to the Employee Retirement Income Security Act
of 1974, as amended.
2.21 ENVIRONMENTAL AND SAFETY LAWS. The Company and its
Subsidiaries (a) are in material compliance with any and all Environmental Laws,
(b) have received all material permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct its business, (c) are in
material compliance with all terms and conditions of any such permit, license or
approval and (d) have no material expenditures that are or, to Company's
knowledge, will be required in order to comply with any such Environmental Laws.
The term "ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) as they currently exist, including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.
2.22 NO GENERAL SOLICITATION. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
Securities.
2.23 NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
the Securities Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated, nor will the Company take any action or steps that would cause the
offering of the Securities to be integrated with other offerings.
2.24 FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor
any of its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any of its Subsidiaries has, in the
course of his actions for, or on behalf of, the Company or any of its
Subsidiaries used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the United States Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
2.25 INTERNAL ACCOUNTING CONTROLS. The Company and its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with general accepted accounting principles and to maintain asset and
liability accountability and (iii) access to assets or incurrence of liability
is permitted only in accordance with management's general or specific
authorization.
2.26 APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
Board have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company's Certificate of Incorporation or the laws of the state of its
incorporation which is or could become applicable to the Purchasers as a result
of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and the Purchasers'
ownership of the Securities, or as a result of the acquisition by the Purchasers
of additional shares of Common Stock (whether then-outstanding or newly issued).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser hereby represents and warrants to the Company, as of the date of the
Agreement and as of the Closing, but only with respect to such Purchaser, as
follows:
3.1 AUTHORIZATION. All action on the part of such Purchaser
necessary for the authorization, execution, delivery and performance by such
Purchaser of the Financing Agreements has been taken, and the Financing
Agreements, when executed and delivered by the Purchasers, will constitute valid
and binding obligations of the Purchasers, enforceable in accordance with their
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application
affecting the enforcement of creditor's rights.
3.2 INVESTMENT. Such Purchaser is acquiring the Series B
Shares, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act. Such Purchaser understand
that the Securities to be purchased by it have not been and will not be (except
as contemplated by the Investors' Rights Agreement) registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.
3.3 EXPERIENCE; ACCREDITED INVESTOR. Such Purchaser has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Securities and
protecting its own interests in connection with such investment. Such Purchaser
is an "accredited investor" within the meaning of Regulation D promulgated under
the Securities Act.
3.4 RULE 144. Such Purchaser acknowledges that the Securities
are restricted securities within the meaning of applicable securities laws, have
not been registered under the Securities Act, and must be held indefinitely
unless subsequently registered under the Securities Act and applicable state and
other securities laws or unless an exemption from such registration is
available. Such Purchaser is aware of the provisions of Rule 144 promulgated
under the Securities Act that permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions. The
Securities will bear a legend reflecting these conditions on transferability
thereof.
3.5 INFORMATION. Such Purchaser believes it has had an
opportunity to discuss the Company's business, management and financial affairs
with the Company's management and an opportunity to review the Company's
facilities. Such Purchaser represents and acknowledges that it believes it has
had an opportunity to ask questions and receive answers from the Company's
officers, employees and directors regarding the terms and conditions of the
offering of the Securities. Such Purchaser has sought such advice as it
considered necessary to make an informed investment decision with respect to
acquisition of the Securities. The foregoing, however, does not limit or modify
such Purchaser's rights under this Agreement including, without limitation, the
representations and warranties of the Company in this Agreement or the right of
such Purchaser to rely thereon.
3.6 FURTHER LIMITATIONS ON DISPOSITIONS. Without in any way
limiting the representations set forth above, such Purchaser further agrees
that, if at the time of any transfer of any Securities, such Securities shall
not be registered under the Securities Act, prior to any disposition of all or
any portion of the Securities, the Company may require, as a condition of
allowing such transfer, that the holder or transferee furnish to the Company (i)
such information as is appropriate to establish that such transfer may be made
without registration under the Securities Act; and (ii) at the expense of the
holder or transferee, an opinion by legal counsel designated by such holder or
transferee and reasonably satisfactory in form and substance to the Company, to
the effect that such transfer may be made without registration under the
Securities Act. No such opinion of the Counsel shall be necessary for any
transfer to any person or entity that is deemed to be an "affiliate" of such
Purchaser for purposes of the Securities Act, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if the transferee were an original Purchaser hereunder.
3.7 RESIDENCE. Such Purchaser is a resident of that
jurisdiction specified in its address listed on EXHIBIT A.
3.8 CONFIDENTIALITY. Such Purchaser shall not disclose or
provide to any other person or entity any non-public information or materials,
or copies thereof, whatsoever about the Company, disclosed or made available to
the Purchasers in connection with the transactions contemplated hereby, or in
the Purchasers' capacity as stockholders of the Company; PROVIDED, HOWEVER, that
such Purchaser may disclose such information to such Purchaser's legal and
financial advisors in connection with advice to be rendered by them to such
Purchaser, or to such Purchaser's investors or potential investors or
affiliates, or to any transferee or potential transferees of the Securities if
such transfer is made in compliance with all the terms and conditions of this
Agreement. Prior to such disclosure, such Purchaser shall: (i) advise such legal
and financial advisors or such Purchaser's investors or potential investors or
affiliates, or transferees or potential transferee, as the case may be, that
each of them shall not further disclose such information or materials to any
other person or entity or utilize such information or materials for the benefit
of any person or entity other than the Company or the Purchasers, or such
transferee, in the capacity of a stockholder of the Company, or in connection
with the transactions contemplated hereby; and (ii) ensure that each such person
or entity executes an nondisclosure agreement in favor of the Company, the form
of which is customary for general commercial transactions. The nondisclosure
obligations set forth above shall not apply to any information which the Company
determines in writing shall not be the subject of such nondisclosure
obligations, nor shall such obligations apply to any information which, by
applicable law, the Company may not prohibit the Purchasers from disclosing. The
Purchasers may disclose any information to any governmental authority having
jurisdiction over it, provided that the Company when reasonably possible shall
be given reasonable advance written notice of Purchaser's intent to disclose any
information covered under this Section 3.8 unless Purchaser is precluded from
doing so by applicable law.
3.9 GENERAL SOLICITATION. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
3.10 BROKER-DEALER. Neither Purchaser nor any Affiliate of
Purchaser is a registered broker-dealer under the rules and regulations of the
SEC and NASD.
SECTION 4. CONDITIONS TO PURCHASERS' OBLIGATIONS.
4.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. The
obligation of each Purchaser hereunder to purchase Series B Shares at the
Closing, is subject to the fulfillment on or prior to the Closing of each of the
following conditions, provided that these conditions are for such Purchaser's
sole benefit and may be waived by the Purchasers at any time in their sole
discretion by providing the Company with written notice thereof.
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Company in Section 2 hereof shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on and as of the Closing with the same force
and effect as if they had been made on and as of the same date.
(b) COVENANTS. All covenants, agreements, and
conditions in this Agreement required to be performed or complied with by the
Company on or prior to the Closing shall have been performed or complied with in
all material respects by the Company.
(c) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings in connection with the transactions contemplated hereby and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser.
(d) PERMITS. All governmental and third party
Permits, filings and waivers necessary for consummation of the transactions to
be consummated at the Closing shall have been obtained.
(e) FILING OF DESIGNATION. The Series B Designation
shall have been filed with the Secretary of State of the State of Delaware.
(f) GOOD STANDING CERTIFICATES. The Company shall
have delivered a certificate of status dated as of a date no more than three (3)
business days prior to the Closing issued by the Secretary of State of the State
of Delaware to the effect that the Company is legally existing and in good
standing.
(g) SECRETARY'S CERTIFICATE. The Company shall have
delivered a certificate executed by the Secretary or Assistant Secretary of the
Company dated as of the Closing certifying to the following matters: (i) the
resolutions adopted by the Board relating to the transactions contemplated by
this Agreement, (ii) the Company's certificate of incorporation as of the
Closing , including the Series B Designation, as certified by the Delaware
Secretary of State, (iii) the Bylaws of the Company; and (iv) incumbency of the
officers of the Company authorized to execute the Financing Agreements.
(h) STOCK CERTIFICATES. The Company shall have
executed and delivered to each Purchaser a certificate for the Series B Shares
purchased by such Purchaser at the Closing.
(i) FINANCING AGREEMENTS. The Company shall have
executed each of the Financing Agreements and delivered the same to such
Purchaser.
(j) COMPLIANCE CERTIFICATE. The Chief Executive
Officer and Chief Financial Officer of the Company shall have executed and
delivered as of the Closing, a certificate certifying that the conditions
specified in Sections 4.1(a), (b), and (o) have been fulfilled.
(k) OPINION OF COUNSEL. Such Purchaser shall have
0received an opinion of Proskauer Rose LLP, counsel to the Company, as of the
Closing, in substantially the form as attached hereto as EXHIBIT I.
(l) LISTING OF COMMON STOCK. The Common Stock shall
be designated for quotation on either the NASDAQ National Market or the NASDAQ
SmallCap Market, and shall not have been suspended by the SEC or NASDAQ from
trading on such market.
(m) RESERVATION OF COMMON STOCK. The Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Series B Shares, at least 6,050,339
shares of Common Stock.
(n) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction or other order or decree, and no other legal
restraint or prohibition shall exist which prevents or arguably prevents the
consummation of the transactions contemplated by the Financing Agreements, nor
shall any proceeding have been commenced or threatened with respect to the
foregoing.
(o) NO MATERIAL ADVERSE EFFECT. Between the time of
the execution of this Agreement and the Closing, there shall have been no
development, condition or circumstance which has had or could reasonably be
expected to have a Material Adverse Effect.
(p) TRANSFER AGENT CERTIFICATE. The Company shall
have caused to be delivered a certificate executed by the transfer agent of the
Company certifying the total number of shares of Common Stock of the Company
outstanding as of a day within five (5) days prior to the Closing.
(q) ASSET PURCHASE AGREEMENT. The Company shall have
executed and delivered an Asset Purchase Agreement to acquire certain assets of
Elbit Vflash Inc., d/b/a Nowmaketing (the "Asset Purchase Agreement"), and
consummated the transactions contemplated thereby, including, without
limitation, the intellectual property associated with NowCode, in exchange for
4.1 million shares of the Company's Common Stock.
SECTION 5. CONDITIONS TO COMPANY'S OBLIGATIONS
5.1 CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to issue, sell and deliver the Series B Shares at the
Closing is subject to the fulfillment at or prior to the Closing of the
following conditions, any of which may be waived in whole or in part by the
Company at any time in its sole discretion by providing the Purchasers with
written notice thereof.
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Purchasers in Section 3 hereof shall
be true and correct in all material respects when made, and shall be true and
correct in all material respects at the Closing, with the same force and effect
as if they had been made on or as of the same date.
(b) PAYMENT OF THE PURCHASE PRICE. The Purchasers
shall have delivered to the Company the aggregate Purchase Price for the Series
B Shares purchased at the Closing.
(c) FINANCING AGREEMENTS. The Purchasers shall have
executed each of the Financing Agreements and delivered the same to the Company.
(d) COVENANTS. All covenants, agreements, and
conditions in this Agreement required to be performed or complied with by the
Purchasers on or prior to the Closing shall have been performed or complied with
in all material respects by such Purchasers.
(e) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction or other order or decree, and no other legal
restraint or prohibition shall exist which prevents or arguably prevents the
consummation of the transactions contemplated by the Financing Agreements, nor
shall any proceeding have been commenced or threatened with respect to the
foregoing.
(f) ASSET PURCHASE AGREEMENT. The Purchasers shall
have executed and delivered the Asset Purchase Agreement and the transactions
contemplated thereby shall have been consummated.
SECTION 6. COVENANTS. The parties hereby covenant and agree as
follows:
6.1 FORM D AND BLUE SKY. The Company agrees to file timely a
Form D with the SEC with respect to the Securities as required under Regulation
D and to provide a copy thereof to each Purchaser promptly after such filing.
The Company shall, on or before the Closing, take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or
to qualify the applicable Securities for, sale to the Purchasers at the Closing
pursuant to this Agreement under applicable securities or "Blue Sky" laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Purchasers on or
prior to the Closing. The Company shall make all timely filings and reports
relating to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing.
6.2 REPORTING STATUS. With a view to making available to the
Purchaser the benefits of Rule 144 promulgated under the Securities Act or any
similar rule or regulation of the SEC that may at any time permit the Purchasers
to sell securities of the Company to the public without registration ("RULE
144"), the Company shall take all action reasonably available to: (1) make and
keep public information available, as those terms are understood and defined in
Rule 144; and (2) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act.
This Section 6.2 shall terminate with respect to a Purchaser when such Purchaser
is able to sell pursuant to Rule 144(k) all the shares of Common Stock issuable
to such Purchaser upon conversion of any Series B Shares acquired hereunder by
such Purchaser.
6.3 TRANSFER AGENT MATTERS. The Company and the Purchasers
shall agree, prior to the Closing, on a form of letter of instruction to be
delivered to the Company's transfer agent regarding the issuance of the
Securities (which shall include, among other matters, irrevocable instructions
to issue certificates upon conversion of the Series B Shares). The Company
shall, prior to or as of the Closing, deliver to the transfer agent an executed
copy of such letter authorizing the transfer agent to issue, pursuant to the
instructions in the letter, the Securities.
6.4 PRESS RELEASE. The Company shall issue a press release or
other announcement of this Agreement and the transactions contemplated hereby in
such form as mutually agreed by the Company and the Purchasers, promptly
following the Closing. The Purchaser shall not issue any press release or make
any other public statement with respect to the Financing Agreements or the
transactions contemplated thereby, except as required by law.
SECTION 7. MISCELLANEOUS
7.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any
term hereof may be amended except by a written instrument signed by the Company
and Purchaser holding a majority of the Series B Shares purchased hereunder.
This Agreement may not be waived except by an instrument in writing executed by
the party entitled to the benefits thereby waived. No waiver of any term,
provision or condition of this Agreement, in any one or more instances, shall be
deemed to be, or construed to be, a further or continuing waiver of any such
term, provision or condition, or as a waiver of any other term, provision or
condition of this Agreement.
7.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York as such laws are applied to
agreements between New York residents entered into and to be performed entirely
within New York. Each party hereto irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the Southern District of
New York for the adjudication of any dispute hereunder.
7.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchasers
and the closing of the transactions contemplated hereby until the earlier of (i)
the first anniversary of the date hereof and (ii) the date on which the
Purchasers have sold or otherwise transferred (other than to their affiliates)
all the Securities issued to such Purchasers hereunder. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder as of the date of such certificate or instrument.
7.4 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. Notwithstanding anything else herein to the contrary, each
Purchaser may freely assign its rights hereunder to any person or entity that is
deemed to be an "affiliate" of such Purchaser for purposes of the Securities
Act.
7.5 ENTIRE AGREEMENT. This Agreement (i) constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and supercedes all prior understandings and agreements relating
to the subjects hereof, whether written or oral between the parties hereof and
(ii) terminates any and all rights the parties may have had that arose under or
in connection with all prior understanding and agreements, including in each
case all prior term sheets between the Company and any or all of the Purchasers.
7.6 SEVERABILITY OF THIS AGREEMENT. In case any provision of
this 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.
7.7 LEGENDS. Each certificate representing the Securities
shall be endorsed with a legend referencing such restrictions of such rules and
regulations of the SEC and such contractual restrictions as the Company deems
appropriate and a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
Each certificate representing the Securities shall also bear any legend required
by any applicable state or foreign securities laws. The Company need not
register a transfer of Securities unless the conditions specified in the
foregoing legends are satisfied. The Company may also instruct its transfer
agent not to register the transfer of any of the Securities unless the
conditions specified in the foregoing legend is satisfied.
7.8 REMOVAL OF LEGENDS AND TRANSFER RESTRICTIONS. The legend
relating to the Securities Act endorsed on a stock certificate pursuant to
Section 7.7 of this Agreement and the stop transfer instructions with respect to
the shares of the Securities represented by such certificate shall be removed
and the Company shall issue a certificate without such legend to the holder of
such shares, if such shares are sold under Rule 144 or, in the event subsection
(ii) below applies, are eligible to be sold and such holder provides to the
Company an opinion of counsel reasonably satisfactory to the Company to the
effect that (i) a public sale, transfer or assignment may be made without
registration or (ii) such shares may be sold pursuant to Rule 144(k) of the
Securities Act.
7.9 TITLES AND SUBTITLES The titles of the Sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.11 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to the Purchasers, upon
any breach or default of the Company under this Agreement, shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default therefore or
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character by the Purchasers of any breach or default
under this Agreement, or any waiver by the Purchasers of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in writing and that all remedies, either under
this Agreement, or by law or otherwise afforded to the Purchasers, shall be
cumulative and not alternative.
7.12 EXPENSES.
(a) Each party will bear its respective costs, fees
and expenses (including legal and auditors' fees) incurred in connection with
the Financing Agreements and the transactions contemplated hereby and thereby.
(b) In the event that any action, suit or other
proceeding is instituted concerning or arising out of the Financing Agreements
or the transactions contemplated hereby and thereby, the prevailing party shall
recover all of such party's reasonable costs, fees and expenses (including legal
fees) incurred in each such action, suit or other proceeding, including any and
all appeals or petitions therefrom.
7.13 NOTICES. Any notice, instruction, or communication
required or permitted to be given under this Agreement to any party shall be in
writing (which may include telex, telegram, telecopier, or other similar form of
reproduction followed by a mailed hard copy) and shall be deemed given when
actually received or, if earlier, five days after deposit in the United States
Mail by certified or express mail, return receipt requested, postage prepaid,
(or for foreign addresses by Federal Express, DHL or other comparable delivery
service) addressed to the principal office of such party or to such other
address as such party may request by written notice. Each party shall make an
ordinary, good faith effort to ensure that the person to be given notice
actually receives such notice. The address of the Purchasers shall be as set
forth on EXHIBIT A hereto or at such other address as the Purchaser shall have
furnished to the Company in writing. Notice of change of address shall be given
in accordance herewith. For ease of reference, a current business address for
the Company is as follows:
To Company: 24/7 Real Media, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
A copy of any notice to the Company (which shall not constitute notice)
shall be given to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed and delivered or
caused this Series B Preferred Stock Purchase Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year
first written above.
"COMPANY"
24/7 REAL MEDIA, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and CFO
"PURCHASERS"
ELBIT LTD.
By: /s/ Xxx Xxx Itzhak
----------------------------
Name: Xxx Xxx Xxxxxx
Title:
By: /s/ Xxxx Xxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxx
Title:
GILBRIDGE INC.
By: /s/ Xxxxxxxx Xxxx
----------------------------
Name: Xxxxxxxx Xxxx
Title: Chairman and CEO
B
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]
EXHIBIT A
SCHEDULE OF PURCHASERS
PURCHASERS AND ADDRESS SERIES B SHARES
---------------------- ---------------
ELBIT LTD. 100,000
c/o Elron Electronic Industries Ltd.
3 Azrieli Center
Xxx Xxxxxxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
Tel: (000) 0-000-0000
Fax: (000) 0-000-0000
GILBRIDGE INC. 25,000
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
in each case, with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
