1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
AMONG
INTERLAND, INC.
CREST COMMUNICATIONS PARTNERS L.P.,
CREST ENTREPRENEURS FUND L.P.,
BOULDER VENTURES III, L.P.
AND
THE OTHER INVESTORS SET FORTH ON EXHIBIT C HERETO
DATED DECEMBER 2, 1999
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TABLE OF CONTENTS
Page
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1. DEFINITIONS............................................................
2. SALE AND PURCHASE OF SHARES............................................
2.1. Sale and Purchase of Shares...................................
2.2 Closing.......................................................
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................
3.1. Organization and Standing.....................................
3.2. Subsidiaries..................................................
3.3. Certificate or Articles of Incorporation and Bylaws...........
3.4. Capital Structure of the Company..............................
3.5. Directors, Officers and Employees.............................
3.6. Financial Statements..........................................
3.7. No Liabilities................................................
3.8. Accounts Receivable; Accounts Payable.........................
3.9. Taxes.........................................................
3.10. Conduct of Business; Absence of Material Adverse Change.......
3.11. Title to Property and Assets..................................
3.12. Insurance.....................................................
3.13. Intellectual Property.........................................
3.14. Year 2000 Compliance..........................................
3.15. Debt Instruments..............................................
3.16. Leases........................................................
3.17. Other Agreements..............................................
3.18. Books and Records.............................................
3.19. Litigation; Disputes..........................................
3.20. Labor Relations...............................................
3.21. Pension and Benefit Plans.....................................
3.21.1. Disclosure Schedule..................................
3.21.2. Copies of Documents..................................
3.21.3. Multiemployer Plans..................................
3.21.4. ESOPs................................................
3.21.5. Funding..............................................
3.21.6. Contributions and Other Obligations..................
3.21.7. Qualified Plans......................................
3.21.8. Compliance with Law..................................
3.21.9. Non-deductible Payments..............................
3.21.10. Reportable Events....................................
3.21.11. Foreign Plan.........................................
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3.21.12. Tax Form 5330......................................
3.21.13. Welfare Plans......................................
3.21.14. Post-Retirement Plans..............................
3.21.15. Health Care Continuation Coverage Requirements.....
3.21.16. Filed Returns and Reports..........................
3.22. Environmental.................................................
3.23. Transactions with Related Parties.............................
3.24. Restrictions and Consents.....................................
3.25. Authority; Authorization; No Conflict.........................
3.26. Absence of Violation..........................................
3.27. Compliance with Law; Approvals................................
3.28. Copies of Documents...........................................
3.29. Binding Obligation............................................
3.30. Disclosure....................................................
3.31. Use of Proceeds...............................................
3.32. Systems.......................................................
3.33. Customers.....................................................
3.34. Company's Names, Business and Location of Company Assets......
3.35. Small Business Concern........................................
3.36. Real Property Holding Corporation.............................
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS........................
4.1. Organization and Standing.....................................
4.2. Authorization.................................................
4.3. Binding Obligation............................................
4.4. No Registration Under the Securities Act......................
4.5. Acquisition for Investment....................................
4.6. Evaluation of Merits and Risks of Investment..................
4.7. Additional Information........................................
4.8. Stock Certificate Legend......................................
5. CLOSING DELIVERABLES...................................................
5.1. Opinion of Counsel............................................
5.2. Stockholders' Agreement.......................................
5.3. Registration Rights Agreement.................................
5.4. Corporate Documents...........................................
5.5. Documents at Closing..........................................
5.6. Consents......................................................
5.7. Composition of the Board of Directors.........................
5.8. Investor Representatives Letter...............................
5.9. Gavranovic Employment Agreement...............................
5.10 Xxxxxxxxx Agreement...........................................
6. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION REMEDIES..................
6.1. Survival of Representations...................................
6.2. Agreement of the Company and the Investors to Indemnify.......
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6.3. Conditions of Indemnification.................................
6.4. Specific Performance..........................................
6.5. Remedies Cumulative...........................................
6.6. Limits for Recovery of Losses.................................
7. MISCELLANEOUS..........................................................
7.1. Additional Actions and Documents..............................
7.2. No Brokers....................................................
7.3. Jury Waiver...................................................
7.4. Publicity.....................................................
7.5. Expenses......................................................
7.6. Assignment....................................................
7.7. Entire Agreement; Amendment...................................
7.8. Waiver........................................................
7.9. Severability..................................................
7.10. Governing Law.................................................
7.11. Notices.......................................................
7.12. Headings......................................................
7.13. Execution in Counterparts.....................................
7.14. Limitation on Benefits........................................
7.15. Binding Effect................................................
7.16. Additional Covenants of the Company...........................
7.17. Key Man Life Insurance........................................
7.18. Proprietary Information Agreement.............................
7.19. SBIC Covenants of the Company.................................
7.20. Regulatory Compliance Cooperation.............................
7.21. Real Property Holding Corporation Covenant....................
EXHIBIT A DEFINITIONS
EXHIBIT B TERMS OF SERIES A PREFERRED STOCK
EXHIBIT C INVESTORS
EXHIBIT D FORM OF XXXXXXXXXX XXXXXXXX LLP LEGAL OPINION
EXHIBIT E STOCKHOLDERS' AGREEMENT
EXHIBIT F REGISTRATION RIGHTS AGREEMENT
EXHIBIT G INVESTOR REPRESENTATIVES' LETTER
EXHIBIT H FORM OF XXX XXXXXXXXXX EMPLOYMENT AGREEMENT
EXHIBIT I FORM OF XXXXXXXXX AGREEMENT
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Purchase Agreement") is
entered into as of December 2, 1999 by and among Interland, Inc., a Georgia
corporation (the "Company"), Crest Communications Partners L.P., a Delaware
limited partnership, and Crest Entrepreneurs Fund L.P., a Delaware limited
partnership (collectively, "Crest"), Boulder Ventures III, L.P., a Delaware
limited partnership ("Boulder"), and the other investors set forth on Exhibit C
hereto ("Other Investors" and, together with Crest and Boulder, the
"Investors").
WHEREAS, the Company desires to issue and sell to the
Investors, and the Investors desire to subscribe for and acquire from the
Company, a substantial equity interest in the Company, upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
1 DEFINITIONS
For all purposes of this Purchase Agreement, certain capitalized terms
specified in Exhibit A shall have the meanings set forth in that Exhibit A,
except as otherwise expressly provided.
1 SALE AND PURCHASE OF SHARES
2.1. SALE AND PURCHASE OF SHARES
On the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions hereof,
the Company agrees to issue and sell to the Investors, and the Investors,
severally and not jointly, agree to purchase from the Company, an aggregate of
9,174,313 shares of Series A Convertible Participating Preferred Stock, no par
value per share ("Series A Stock"), having the rights, preferences and other
terms set forth on Exhibit B hereto, at a price per share of Series A Stock of
$2.18 for an aggregate purchase price of $20.0 million. The number of shares of
Series A Stock to be purchased by each Investor and the purchase price to be
paid by each Investor is as set forth on Exhibit C hereto.
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2.2 CLOSING
The closing of the sale and purchase of the shares of Series A Stock shall take
place at the offices of Xxxxx & Xxxxxxx L.L.P., 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxx, Xxxxxxxx 00000, at 10:00 a.m., Baltimore time, on the date
hereof or at such other location, date and time as may be agreed upon between
the Investors and the Company (the "Closing"). At the Closing, the Company
shall issue and deliver to each Investor a stock certificate or certificates in
definitive form, registered in the name of such Investor, representing the
Series A Stock. As payment in full for the shares of Series A Stock being
purchased by it at the Closing, and against delivery of the stock certificate
or certificates therefor as aforesaid, on the Closing Date each Investor shall
deliver to the Company by wire transfer of immediately available funds the
amount set forth opposite the name of such Investor under the heading "Purchase
Price for Shares at Closing" on Exhibit C.
1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the Disclosure Schedule,
the Company represents and warrants (which representation and warranty shall be
deemed to include the disclosure with respect thereto so specified in the
Disclosure Schedule) to the Investors as set forth below in this SECTION 3. The
disclosures made in the Disclosure Schedule with respect to a Section of this
Purchase Agreement shall also be deemed disclosures with respect to all other
applicable Sections of this Agreement. For purposes of this SECTION, the term
"Company" shall include any predecessor entity and any and all Subsidiaries,
unless the context requires otherwise.
3.1. ORGANIZATION AND STANDING
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia and has all
requisite corporate power and corporate authority to own, operate and lease its
Assets, to carry on its business as currently conducted and to carry out the
transactions contemplated hereby. The Company has made available to the
Investor Representatives complete and correct copies of the certificate or
articles of incorporation and by-laws of the Company, with all amendments
thereto, as in effect on the date of this Purchase Agreement. The Company is
not qualified to conduct business in any other jurisdiction which is not listed
on the Disclosure Schedule, and neither the nature of the business conducted
by, nor the character of the Assets owned, leased or
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otherwise held by, the Company makes such qualification necessary except where
the failure to be so qualified would not have a Material Adverse Effect.
3.2. SUBSIDIARIES
Except as set forth on the Disclosure Schedule, the Company
has no Subsidiaries and no equity investment or other interest in, nor has the
Company made advances or loans to, any corporation, association, partnership,
joint venture or other entity, other than credit extended in the Ordinary
Course of Business, except as set forth in the Disclosure Schedule. The
Disclosure Schedule sets forth (a) the authorized capital stock of each direct
and indirect Subsidiary of the Company and the percentage of the outstanding
capital stock of each Subsidiary directly or indirectly owned by the Company,
and (b) the nature and amount of any such equity investment, other interest or
advance. All of such shares of capital stock of Subsidiaries directly or
indirectly held by the Company have been duly authorized and validly issued and
are outstanding, fully paid and nonassessable. The Company directly, or
indirectly through wholly owned Subsidiaries, owns all such shares of capital
stock of the direct or indirect Subsidiaries free and clear of all
Encumbrances. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its state or jurisdiction of
incorporation (as listed in the Disclosure Schedule), and has all requisite
corporate power and authority to own, operate and lease its Assets and to carry
on its business as currently conducted. Each Subsidiary is qualified to conduct
business and is in good standing in the states, countries and territories
listed in the Disclosure Schedule. The Subsidiaries are not qualified to
conduct business in any other jurisdictions, and neither the nature of their
businesses nor the character of the Assets owned, leased or otherwise held by
them makes any such qualification necessary. There is no state, country or
territory wherein the absence of licensing or qualification as a foreign
corporation would have a Material Adverse Effect.
3.3. CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
The Company has Furnished to the Investor Representatives a
true and complete copy of the certificate or articles of incorporation of the
Company and of each Subsidiary, as currently in effect, certified as of a
recent date by the Secretary of State (or comparable governmental authority) of
the respective jurisdictions of incorporation, and a true and complete copy of
the bylaws of the Company and of each Subsidiary, as currently in effect,
certified by their respective corporate secretaries. Such certified copies are
attached as exhibits to, and part of, the Disclosure Schedule.
3.4. CAPITAL STRUCTURE OF THE COMPANY
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The Disclosure Schedule sets forth the authorized capital
stock of the Company. Upon consummation of the purchase by the Investors of the
shares of Series A Stock contemplated hereby, the authorized capital stock of
the Company will consist solely of (i) 100,000,000 shares of Common Stock, of
which (a) 21,742,975 shares are currently issued and outstanding, (b) 9,174,313
shares are reserved for issuance upon conversion of the Series A Stock, (c)
4,500,000 shares are reserved for issuance pursuant to the Company's Option
Plan, (d) 1,300,000 shares are reserved for issuance pursuant to options issued
to consultants and advisors to the Company and (d) 63,282,712 shares are
authorized but unissued and unreserved and (ii) 10,000,000 shares of Preferred
Stock, of which (a) 9,174,313 shares of Series A Stock are to be issued to the
Investors pursuant to the terms of this Purchase Agreement and (b) 825,687
shares of Series A-1 Convertible Participating Preferred Stock, no par value
per share, are authorized but unissued. All issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable and free of any preemptive rights. Except as
set forth on the Disclosure Schedule or in this SECTION 3.4, no shares of
capital stock of the Company or any Subsidiary have been reserved for any
purpose. Except as set forth on the Disclosure Schedule, there are no
outstanding securities convertible into or exchangeable or exercisable for the
capital stock of the Company or any Subsidiary, or warrants or options to
purchase or to subscribe for any shares of such stock or other securities of
the Company or the Subsidiary. There are no outstanding Agreements affecting or
relating to the voting, issuance, purchase, redemption, repurchase, transfer or
registration for sale under the Securities Act of any securities of the Company
or any Subsidiary, except as contemplated hereunder or described in the
Disclosure Schedule.
3.5. DIRECTORS, OFFICERS AND EMPLOYEES
The Disclosure Schedule lists all current directors and
officers of the Company and all managers and consultants of the Company who,
individually, receive or are entitled to receive annual compensation from the
Company in excess of $50,000, showing each such person's name, position, and
annual remuneration, bonuses and fringe benefits for the current fiscal year.
To the Knowledge of the Company, during the past ten years no director or
officer of the Company has: (i) been arrested or convicted for any crime
material to an evaluation of such person's ability or integrity, including,
without limitation, any violation of any federal or state law which currently
or has previously regulated the types of business in which the Company is
currently or has previously been engaged; (ii) filed a petition under federal
bankruptcy or any state insolvency laws; (iii) been a director or officer of a
business entity which has filed a petition under federal bankruptcy or any
state insolvency laws, or had a receiver or similar officer appointed by a
court to administer the business or property of such entity; (iv) lost a civil
suit in which the
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judgment was in excess of $100,000 or (v) had the Internal Revenue Service file
a lien against his or her property.
3.6. FINANCIAL STATEMENTS
(a) The Company has prepared and Furnished to the
Investors and there are included as exhibits that are part of the Disclosure
Schedule, the audited consolidated balance sheets of the Company as of the end
of the fiscal year ending December 31, 1998, and the audited consolidated
statements of income, stockholders' equity and cash flow for such period (the
"Audited Financial Statements"). The Company has Furnished to the Investors the
unaudited balance sheet of the Company for the nine months ended September 30,
1999, and the unaudited statements of income, stockholders' equity and cash
flow for such period. (The September 30, 1999 unaudited financial statements
and the Audited Financial Statements are herein referred to collectively as the
"Financial Statements"). All of the Financial Statements, including, without
limitation, the notes thereto, referred to in this SECTION or Furnished to the
Investors after the date hereof pursuant to this Purchase Agreement: (i) are in
accordance with the books and records of the Company, (ii) present fairly in
all material respects the consolidated financial position of the Company as of
the respective dates and the results of operations and cash flow for the
respective periods indicated, and (iii) have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior accounting periods except for the absence of footnotes and customary
year-end adjustments in the case of the September 30, 1999 unaudited financial
statements (which will not deviate Materially from the other Financial
Statements). The Financial Statements set forth all changes in accounting
methods (for financial accounting purposes) at any time made, agreed to, or
required with respect to the Company.
(b) The financial forecasts of the Company for the
fiscal years 1999-2003 Furnished to the Investors and attached to this Purchase
Agreement as part of the Disclosure Schedule were prepared by the Company in
good faith on the basis of the assumptions stated therein, and the Company has
no reason to believe that the assumptions or the financial forecasts themselves
are not reasonable; provided, however, that the Company makes no representation
or warranty that the results projected in the financial forecasts will actually
be achieved.
3.7. NO LIABILITIES
Except as reflected in the Financial Statements, as of
September 30, 1999, there existed no liabilities (whether contingent or
absolute, matured or unmatured, known or unknown) of the Company other than (i)
incurred in the Ordinary Course of Business and in amounts that are not
individually Material, and (ii) for taxes, assessments and other governmental
charges, if such taxes, assessments and other charges (x) are not yet due and
payable, or (y) are due and
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payable but can be paid hereafter without penalty or interest and for which
a proper accrual relating thereto is reflected in the Financial Statements and
which will be paid before penalty or interest begins to accrue thereon. Except
as described in the Disclosure Schedule, since September 30, 1999, the Company
has not incurred any liabilities (whether contingent or absolute, matured or
unmatured, known or unknown) other than in the Ordinary Course of Business and
in amounts that are not individually or in the aggregate Material.
3.8. ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE
(a) The accounts receivable of the Company shown on the
Financial Statements Furnished to the Investors, or thereafter acquired by the
Company, have been collected or, to the Company's Knowledge, represent valid
rights to receive payment for bona fide services rendered or goods sold, and
except as set forth on the Disclosure Schedule, are not subject to discounts,
rebates or to offsets of any kind.
(b) Except as set forth on the Disclosure Schedule, the
Company is current on all accounts payable.
3.9. TAXES
(a) Except as set forth on the Disclosure Schedule, the
Company has (or, in the case of returns becoming due after the date hereof and
on or before the Closing Date, will have prior to the Closing Date) duly filed
(or obtained extensions with respect to) all Tax Returns required to be filed
on or before the Closing Date with respect to all applicable Taxes. No
penalties or other charges are or will become due with respect to any such Tax
Returns as the result of the late filing thereof. All of the Tax Returns are
(or, in the case of returns becoming due after the date hereof and on or before
the Closing Date, will be) true and complete in all Material respects. The
Company: (i) has paid all Taxes due or claimed to be due by any taxing
authority in connection with any such Tax Returns; or (ii) has established (or,
in the case of amounts becoming due after the date hereof, prior to the Closing
Date will have paid or established) in the Financial Statements provided to the
Investors adequate reserves (in conformity with generally accepted accounting
principles consistently applied) for the payment of such Taxes. The amounts set
up as reserves for Taxes on the Financial Statements are sufficient for the
payment of all unpaid Taxes as of the dates thereof, whether or not such Taxes
are disputed or are yet due and payable, for or with respect to the period, and
for which the Company may be liable in its own right or as a transferee of the
Assets of, or successor to, any corporation, person, association, partnership,
joint venture or other entity.
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(b) The Company, either individually or in its own right
or as a transferee, does not have and on the Closing Date will not have any
liability for Taxes payable for or with respect to any periods prior to and
including the Closing Date in excess of the amounts actually paid prior to the
Closing Date or reserved for in the Financial Statements (other than Taxes
accruing after September 30, 1999 in the Ordinary Course of Business which are
not payable on or prior to the Closing Date).
(c) Except as set forth in the Disclosure Schedule,
there is no action, suit, proceeding, audit, investigation or claim pending or,
to the Knowledge of the Company, threatened in respect of any Taxes for which
the Company is or may become liable, nor has any deficiency or claim for any
such Taxes been proposed, asserted or, to the Knowledge of the Company,
threatened. The Company has not consented to any waivers or extensions of any
statute of limitations with respect to the collection or assessment of any
Taxes against the Company. There is no Agreement, waiver or consent providing
for an extension of time with respect to the assessment or collection of any
Taxes against the Company and no power of attorney granted by the Company with
respect to any tax matters is currently in force.
(d) The Company has Furnished or otherwise made
available to the Investor Representatives true and complete copies of all Tax
Returns and all written communications relating to any such Tax Returns or to
any deficiency or claim proposed and/or asserted, irrespective of the outcome
of such matter, but only to the extent such items relate to tax years (i) which
are subject to an audit, investigation, examination or other proceeding, or
(ii) with respect to which the statute of limitations has not expired.
(e) The Disclosure Schedule sets forth (i) all federal
tax elections that currently are in effect with respect to the Company, and
(ii) all elections for purposes of foreign, state or local Taxes and all
consents or Agreements for purposes of federal, foreign, state or local Taxes
in each case that reasonably could be expected to affect or be binding upon the
Company or its Assets or operations after Closing. The Disclosure Schedule sets
forth all Material changes in accounting methods for Tax purposes at any time
made, agreed to, or required with respect to the Company.
(f) Except as set forth on the Disclosure Schedule, the
Company has not: (i) been a partner in a partnership or an owner of an interest
in an entity treated as a partnership for federal income tax purposes; (ii)
executed or filed with the Internal Revenue Service any consent to have the
provisions of Section 341(f) of the Code apply to it; (iii) been subject to
Section 999 of the Code; (iv) been a passive foreign investment company as
defined in Section 1296(a) of the Code; or (v) been a party to any Agreement
relating to the sharing, allocation or payment of, or indemnity for, Taxes.
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3.10. CONDUCT OF BUSINESS; ABSENCE OF MATERIAL ADVERSE CHANGE
Except as otherwise contemplated by the terms of this
Purchase Agreement or as set forth in the Disclosure Schedule, since September
30, 1999 there has been no material adverse change in the business, operations,
prospects, condition (financial or otherwise), Assets or liabilities of the
Company. Except as set forth in the Disclosure Schedule or as contemplated
hereunder, since September 30, 1999, the Company has conducted business
substantially in the manner heretofore conducted and only in the Ordinary
Course of Business, and the Company has not:
(a) incurred any loss Materially and adversely affecting
any of its Assets as the result of any fire, explosion, flood, windstorm,
earthquake, labor trouble, riot, accident, act of God or public enemy or armed
forces, or other casualty;
(b) issued any capital stock or member interests, bonds
or other corporate securities or debt instruments, granted any options,
warrants or other rights calling for the issuance thereof, or borrowed any
funds (other than borrowings in the Ordinary Course of Business in amounts,
individually or in the aggregate, that do not exceed $50,000);
(c) incurred, or become subject to, any obligation or
liability (absolute or contingent, matured or unmatured, known or unknown),
except current liabilities incurred in the Ordinary Course of Business and
liens for current taxes, assessments or governmental charges or levies on
property not yet due and delinquent;
(d) discharged or satisfied any Encumbrance or paid any
obligation or liability (absolute or contingent, matured or unmatured, known or
unknown) other than current liabilities shown in the Financial Statements and
current liabilities incurred since September 30, 1999 in the Ordinary Course of
Business;
(e) declared or made payment of, or set aside for
payment, any dividends or distributions of any Assets, or purchased, redeemed
or otherwise acquired any of its capital stock, any securities convertible into
capital stock, or any other securities;
(f) mortgaged, pledged or subjected to any Encumbrance
any Material Assets, except for (i) Encumbrances reflected in the Financial
Statements of the Company or on the Disclosure Schedule, (ii) Encumbrances
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto which do not Materially detract from the value of, or impair the
use of, such property by the Company in the operation of its business, and
(iii) liens for current taxes,
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assessments or governmental charges or levies on property not yet due and
delinquent;
(g) sold, exchanged, transferred or otherwise disposed
of any Material Assets, or canceled any Material debts or claims, except in
each case in the Ordinary Course of Business;
(h) written down the value of any Material Assets or
written off as uncollectible any Material notes or accounts receivable, except
write-downs and write-offs in the Ordinary Course of Business, none of which,
individually or in the aggregate, are Material;
(i) entered into any transactions other than in the
Ordinary Course of Business;
(j) increased by more than five percent (5%) the rate of
compensation payable, or to become payable, by the Company to any of its
officers, employees, agents or independent contractors over the rate being paid
to them on September 30, 1999;
(k) made or permitted any amendment or termination of
any Material Agreement to which it is a party or which it owns;
(l) through negotiation or otherwise made any commitment
or incurred any liability to any labor organization;
(m) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind to any director, officer or
employee other than in the Ordinary Course of Business;
(n) directly or indirectly paid any severance or
termination pay to any officer or employee in excess of three months' salary;
(o) made capital expenditures, or entered into
commitments therefor, aggregating more than $50,000;
(p) made any change in any method of accounting or
accounting practice;
(q) entered into any transaction of the type described
in SECTION 3.23 or
(r) made an Agreement to do any of the foregoing.
3.11. TITLE TO PROPERTY AND ASSETS
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The Company has good, valid and marketable title to all
Material Assets owned by it, free and clear of all Encumbrances other than
those referred to in the Financial Statements (or the notes thereto) and liens
for taxes not yet due and payable. The Company does not own any real estate,
and the Company is not a United States Real Property Holding Company as defined
under Section 897 of the Code. All personal property of the Company is in good
operating condition and repair in all Material respects (ordinary wear and tear
and routinely scheduled maintenance excepted) and is suitable and adequate for
the uses for which it is intended or is being used.
3.12. INSURANCE
(a) Set forth on the Disclosure Schedule is the
following information with respect to each insurance policy (including policies
providing property, casualty, liability and workers' compensation coverage and
bond and surety arrangements) to which the Company has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
three (3) years: (i) the name, address and telephone number of the agent, (ii)
the name of the insurer, (iii) the name of the policyholder, (iv) the name of
each covered insured, (v) the policy number and the period of coverage, (vi)
the scope and amount (including a description of how deductibles and ceilings
are calculated and operate) of coverage, and (vii) a description of any
material retroactive premium adjustments or other loss sharing arrangements.
(b) Other than as set forth in the Disclosure Schedule,
the Company has insurance coverage under policies that (a) are with insurance
companies reasonably believed by the Company to be financially sound and
reputable; (b) are in amounts customary for companies in similar businesses
similarly situated; (c) are legal, valid, binding, enforceable and in full
force and effect; (d) will continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms immediately following the
Closing Date; (e) are sufficient for compliance by the Company with all
requirements of Law and of all Agreements to which the Company is a party; (f)
to the Company's Knowledge are valid and outstanding policies enforceable
against the insurer; and (g) in the Company's reasonable belief, provide
adequate insurance coverage for the Assets and business of the Company.
(c) The Company is not in breach or default (including
with respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration under any
policy.
(d) The Company has not and to the Knowledge of the
Company, no other party to the policy has repudiated any provision of any such
policy.
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(e) The Company currently has no and has never had any
self-insurance arrangements.
3.13. INTELLECTUAL PROPERTY
(a) The Company owns, or is licensed or otherwise
possesses all necessary rights to use all patents, trademarks, trade names,
service marks, trade dress, logos, domain names, copyrights and any
applications or registrations therefor, maskworks, schematics, technology,
know-how, trade secrets, formulas, compositions, technical data, designs,
drawings, specifications, inventory, inventions, ideas, algorithms, processes,
computer software programs and applications (in both source code and object
code form), and tangible or intangible proprietary information or material and
all reissues, extensions and renewals thereof ("Intellectual Property") that
are used in the business or products of the Company as the business is now
conducted and as proposed to be conducted. The Intellectual Property owned or
used by the Company is free and clear of all Encumbrances.
(b) The Disclosure Schedule lists all (i) patents,
patent applications, registered and unregistered trademarks, trade names and
service marks, registered and unregistered copyrights, and maskworks included
in the Intellectual Property that are owned by the Company, including the
jurisdictions, both domestic and foreign, in which each such item of
Intellectual Property right has been issued or registered or in which any
application for such issuance and registration has been filed, (ii) licenses,
sublicenses and other agreements as to which the Company is a party and
pursuant to which any person is authorized to use any Intellectual Property
owned by the Company, and (iii) licenses, sublicenses and other agreements to
which the Company is a party and pursuant to which the Company is authorized to
use any third party patents, trademarks or copyrights, including software
("Third Party Intellectual Property Rights").
(c) Except as disclosed on the Disclosure Schedule, the
Company has taken (or, with respect to Third Party Intellectual Property Rights
that are Material to the Company's business or products, has ensured that the
owner thereof has taken) all necessary action in all appropriate jurisdictions,
both domestic and foreign, to register and maintain the registration of all
Intellectual Property that is Material to the Company's business or products
that may be registered.
(d) To the Knowledge of the Company, there is no actual
or suspected unauthorized use, disclosure, infringement or misappropriation of
any Intellectual Property rights of the Company, or any Third Party
Intellectual Property Rights, that are Material to the Company's business or
properties, to the extent licensed by or through the Company, by any third
party, including any employee or former employee of the Company. The Company
has not notified any third party that it believes such third party is
interfering with, infringing or
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misappropriating any of the Company's Intellectual Property or engaging in any
act of unfair competition. The Company has the right to bring an action for the
infringement of all of its Intellectual Property. The Company has taken all
reasonably necessary measures to protect and maintain its rights in the
Intellectual Property. Except as set forth on the Disclosure Schedule, there
are no royalties, fees or other payments or compensation payable by the Company
to any person by reason of the ownership, use, sale or disposition of
Intellectual Property.
(e) The Company is not, nor will it be as a result of
the execution and delivery of this Purchase Agreement, the Series A Stock or
the Agreements contemplated hereby, or the performance of its obligations
thereunder, in breach of any license, sublicense or other agreement relating to
the Intellectual Property, including Third Party Intellectual Property Rights.
(f) The Company has no Knowledge that the conduct of the
business of the Company infringes any patent, trademark, service xxxx,
copyright, trade secret or other proprietary right of any third party. There
are no pending or, to the Company's Knowledge, threatened claims against the
Company alleging that the conduct of its business infringes any Intellectual
Property rights of others. The Intellectual Property of the Company is not
subject to any outstanding injunction, judgment, order, decree, ruling or
charge. To the Company's Knowledge, the Company has not engaged in unfair
competition against any third party.
(g) All present or former officers, directors, employees
and consultants of the Company have executed and delivered to the Company an
agreement regarding assignment to the Company of any Intellectual Property
arising from services performed for the Company by such persons. Except as
disclosed on the Disclosure Schedule, there is no Intellectual Property
developed by a present or former stockholder, director, officer, consultant or
employee of the Company that is used in the business of the Company that has
not been transferred to, or is not owned free and clear of any liens or
encumbrances by, the Company.
(h) The Company has entered into written confidentiality
agreements with all third parties having access to Company-owned Intellectual
Property in connection with the disclosure to, or use or appropriation by,
those third parties, of Intellectual Property owned by the Company that is not
otherwise protected by a patent, a patent application, copyright, trademark, or
other registration or legal scheme.
3.14. YEAR 2000 COMPLIANCE
(a) Each system owned or used by the Company comprised of software,
hardware or databases, the operational failure of which would be reasonably
likely to result in
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a Material Adverse Effect (collectively, a "System") will be able to accurately
process date data, including, but not limited to, calculating, comparing and
sequencing from, into and between the twentieth century (through year 1999),
the year 2000 and the twenty-first century, including leap year calculations
(having such ability being referred to herein as "Year 2000 Compliant"). The
Company has no reason to believe that it or any of its Subsidiaries will incur
material expenses arising from or relating to the failure of any of their
Systems to be Year 2000 Compliant.
(b) All vendors of products to the Company or any of its Subsidiaries, the
operational failure of which due to a failure to be Year 2000 Compliant would
be reasonably likely to result in a Material Adverse Effect, and such
respective products, to the Knowledge of the Company, are (or prior to December
31, 1999, will be) Year 2000 Compliant. To the knowledge of the Company, each
such vendor will continue to furnish its products to the Company or its
Subsidiaries, as applicable, without interruption or material delay, on and
after January 1, 2000.
3.15. DEBT INSTRUMENTS
The Disclosure Schedule lists all mortgages, indentures,
notes, guarantees and other Agreements for or relating to borrowed money
(including, without limitation, conditional sales agreements and capital
leases) involving payments by the Company aggregating in excess of $25,000 per
year to which the Company is a party or which have been assumed by the Company
or to which any Material Assets are subject. The Company has performed all the
Material obligations under such Agreements listed on the Disclosure Schedule
required to be performed by it to date and are not in default in any Material
respect under any of the foregoing, and, to the Knowledge of the Company, there
has not occurred any event which (whether with or without notice, lapse of time
or the happening or occurrence of any other event) would constitute such a
default.
3.16. LEASES
The Disclosure Schedule lists all leases and other Agreements
under which the Company is a lessee or lessor of any Material Asset (including
Real Property), or holds, manages or operates any Material Asset owned by any
third party, or under which any Material Asset owned by the Company is held,
operated or managed by a third party. Except as described in the Disclosure
Schedule, the Company is the owner and holder of all the leasehold estates
purported to be granted by the leases or other Agreements listed in the
Disclosure Schedule. Each such lease and other Agreement is in full force and
effect and constitutes a legal, valid and binding obligation of, and is legally
enforceable against, the Company, and, to the Company's Knowledge, the other
parties thereto (except as enforceability may be limited or affected by
bankruptcy, insolvency, reorganization,
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moratorium, fraudulent conveyance and other similar laws and equitable
principles now or hereafter in effect and affecting the rights and remedies of
creditors generally), and grants the leasehold estate it purports to grant free
and clear of all Encumbrances. All necessary governmental approvals with
respect thereto have been obtained and all necessary filings or registrations
therefor have been made, in each case to the extent that the Company is
responsible therefor, other than where the failure to obtain any such approvals
would not have a Material Adverse Effect, and there are no outstanding disputes
thereunder and, to the Knowledge of the Company, there have been no threatened
cancellations thereof. The Company has in all respects performed all material
obligations thereunder required to be performed by it to date. Neither the
Company nor, to the Knowledge of the Company, any other party is in default in
any Material respect under any of the foregoing, and, to the Knowledge of the
Company, there has not occurred any event which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute such a default.
3.17. OTHER AGREEMENTS
(a) The Disclosure Schedule lists all Material
Agreements to which the Company is a party or by which the Company is bound at
the date hereof. Each such Material Agreement is in full force and effect and
constitutes a legal, valid and binding obligation of, and is legally
enforceable against the Company and to the Company's Knowledge, the other
parties thereto (except as enforceability may be limited or affected by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws and equitable principles now or hereafter in effect and
affecting the rights and remedies of creditors generally). All necessary
governmental approvals with respect thereto have been obtained and all
necessary filings or registrations therefor have been made, in each case to the
extent that the Company is responsible therefor, other than where the failure
to obtain any such approvals would not have a Material Adverse Effect, and
there are no outstanding disputes thereunder and, to the Knowledge of the
Company, there have been no threatened cancellations thereof. The Company has
performed all the material obligations thereunder required to be performed to
date. Neither the Company nor, to the Knowledge of the Company, any other party
is in default in any Material respect under any of the Agreements listed in the
Disclosure Schedule, and, to the Knowledge of the Company, there has not
occurred any event which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute such a default.
(b) Except as listed in the Disclosure Schedule (and
without limiting the foregoing), the Company is not a party to any oral or
written:
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(i) Agreement for the employment of any officer,
employee, consultant or independent contractor;
(ii) license agreement or distributor, dealer,
manufacturer's representative, sales agency, advertising, property management
or brokerage agreement;
(iii) Agreement with any labor organization or other
collective bargaining unit;
(iv) Agreement for the future purchase of materials,
supplies, services, merchandise or equipment involving payments of more than
$50,000 over its remaining term (including, without limitation, periods covered
by any option to renew by either party);
(v) Agreement for the purchase, sale or lease of any
real estate or other Assets involving payments of more than $50,000 over its
remaining term (including, without limitation, periods covered by any option to
renew by either party);
(vi) profit-sharing, bonus, incentive compensation,
deferred compensation, stock option, severance pay, stock purchase, employee
benefit, insurance, hospitalization, pension, retirement or other similar plan
or Agreement;
(vii) Agreement for the sale of any of its Material Assets
or the grant of any preferential rights to purchase any of its Material Assets
or rights, other than in the Ordinary Course of Business;
(viii) Agreement which contains any provisions requiring
the Company to indemnify any other party thereto;
(ix) joint venture agreement or other Agreement involving
the sharing of profits;
(x) outstanding loan to any person or entity or
receivable due from any stockholder of the Company or persons or entities
controlling, controlled by or under common control with the Company;
(xi) Agreement (including, without limitation, Agreements
not to compete and exclusivity Agreements) that reasonably could be interpreted
to impose any restriction on any business operations of the Company; or
(xii) other Material Agreement which by its terms does not
terminate or is not terminable by the Company within 30 days or upon 30 days'
(or less) notice.
3.18. BOOKS AND RECORDS
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The books of account, stock records, minute books and other
records of the Company are true and accurate in all Material respects and have
been maintained in accordance with good business practices and the matters
contained therein are appropriately and accurately reflected in the Financial
Statements.
3.19. LITIGATION; DISPUTES
(a) Except as described in the Disclosure Schedule,
there are no actions, suits, claims, arbitrations, proceedings or known
investigations pending or, to the Knowledge of the Company, threatened or
reasonably anticipated against, affecting or involving the Company, or its
business or Assets, or the transactions contemplated by this Purchase Agreement
before or by any court, arbitrator or governmental authority, domestic or
foreign. The Company is not operating under, subject to or in default with
respect to any order, award, writ, injunction, decree or judgment of any court,
arbitrator or governmental authority. The Company has Furnished to the Investor
Representatives copies of all pleadings filed with respect to any Material
litigation in which the Company is engaged.
(b) Except as set forth on the Disclosure Schedule, the
Company is not currently involved in nor, to the Knowledge of the Company,
reasonably anticipates any material dispute with any of its current or former
employees, agents, brokers, distributors, vendors, customers, business
consultants, franchisees, franchisers, representatives or independent
contractors (or any current or former employees of any of the foregoing persons
or entities) which would reasonably be expected to have a Material Adverse
Effect.
3.20. LABOR RELATIONS
There are no strikes, work stoppages, grievance proceedings,
union organization efforts or other controversies pending or, to the Knowledge
of the Company, threatened or reasonably anticipated between the Company and
(a) any current or former employees of the Company, or (b) any union or other
collective bargaining unit representing the employees. Except as set forth in
the Disclosure Schedule, the Company is in compliance in all Material respects
with all Laws relating to employment or the workplace, including, without
limitation, provisions relating to wages, hours, collective bargaining, safety
and health, work authorization, equal employment opportunity, immigration,
withholding, unemployment compensation, worker's compensation, employee privacy
and right to know. Except as set forth on the Disclosure Schedule, there are no
collective bargaining agreements, employment agreements between the Company and
any of its employees, or professional service agreements not terminable at will
without penalty relating to the businesses and Assets of the Company. The
consummation of the transactions contemplated hereby will not cause the Company
or the
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Investors to incur or suffer any liability relating to, or obligation to pay,
severance, termination or other payments to any person or entity.
3.21. PENSION AND BENEFIT PLANS
3.21.1. DISCLOSURE SCHEDULE
Except as set forth in the Disclosure Schedule, the Company
(a) does not maintain and has never has maintained any Plan or Other
Arrangement, (b) is not nor ever has been a party to any Plan or Other
Arrangement and (c) has no obligations under any Plan or Other Arrangement.
3.21.2. COPIES OF DOCUMENTS
The Company has Furnished to the Investor Representatives
true and complete copies of each of the following Documents: (a) the Documents
setting forth the terms of each Plan; (b) all related trust agreements or
annuity agreements (and any other funding Document) for each Plan; (c) for the
three most recent plan years, all annual reports (Form 5500 series) on each
Plan that have been filed with any governmental agency; (d) the current summary
plan description and subsequent summaries of material modifications for each
Title I Plan; (e) all DOL opinions on any Plan and all correspondence relating
to the request for and receipt of each opinion; (f) all correspondence with the
PBGC on any Plan; (g) all IRS rulings, opinions or technical advice relating to
any Plan and all correspondence relating to the request for and receipt of each
ruling, opinion or technical advice; and (h) all Agreements with service
providers or fiduciaries for providing services on behalf of any Plan. For each
Other Arrangement, the Company has Furnished to the Investor Representatives
true and complete copies of each policy, Agreement or other Document setting
forth or explaining the terms of the Other Arrangement, all related trust
agreements or other funding Documents (including, without limitation, insurance
contracts, certificates of deposit, money market accounts, etc.), all material
employee communications, all material correspondence or other submissions with
any governmental agency, and all Agreements with service providers or
fiduciaries for providing services on behalf of any Other Arrangement.
3.21.3. MULTIEMPLOYER PLANS
No Plan is a Multiemployer Plan.
3.21.4. ESOPS
No Plan is an ESOP.
3.21.5. FUNDING
No Plan is a Defined Benefit Plan.
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3.21.6. CONTRIBUTIONS AND OTHER OBLIGATIONS
To the Knowledge of the Company, the Company has made all
contributions and other payments required by and due under the terms of each
Plan and Other Arrangement and has taken no action (including, without
limitation, actions required by Law) relating to any Plan or Other Arrangement
that will Materially increase the Company's obligations under any Plan or Other
Arrangement.
3.21.7. QUALIFIED PLANS
The Disclosure Schedule sets forth a list of all Qualified
Plans. All Qualified Plans and any related trust agreements or annuity
agreements (or any other funding Document) comply and have complied, in all
material respects, with ERISA, the Code (including, without limitation, the
requirements for Tax qualification described in Section 401 thereof), and all
other Laws. To the Knowledge of the Company, the trusts established under the
Plans are exempt from federal income taxes under Section 501(a) of the Code.
The Company has received determination letters issued by the IRS with respect
to each Qualified Plan, and the Company has Furnished to the Investor
Representatives true and complete copies of all such determination letters and
all correspondence relating to applications therefor. All statements made by or
on behalf of the Company to the IRS in connection with applications for
determination with respect to each Qualified Plan were true and complete when
made and continue to be true and complete and nothing has occurred since the
date of the most recent applicable determination letter that would adversely
affect the tax-qualified status of any Qualified Plan.
3.21.8. COMPLIANCE WITH LAW
The Company has complied in all Material respects with all
applicable provisions of the Code, ERISA, the National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Fair Labor Standards Act, the Securities Act, the Securities Exchange
Act of 1934, and all other Laws pertaining to the Plans, Other Arrangements and
other employee or employment related benefits, and all premiums and assessments
relating to all Plans or Other Arrangements. To the Knowledge of the Company,
the Company does not have any liability for any delinquent contributions within
the meaning of Section 515 of ERISA (including, without limitation, related
attorneys' fees, costs, liquidated damages and interest) or for any arrearages
of wages. The Company does not have any pending unfair labor practice charges,
contract grievances under any collective bargaining agreement, other
administrative charges, claims, grievances or lawsuits before any court,
governmental agency, regulatory body, or arbiter arising under any Law
governing any Plan, and to the Knowledge of the Company, there exist no facts
that could give rise to such a claim.
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3.21.9. NON-DEDUCTIBLE PAYMENTS
No Plan or Other Arrangement, individually or collectively,
provides for any payment by the Company to any employee or independent
contractor that is not deductible under Section 162(a)(1) or 404 of the Code or
that is an "excess parachute payment" pursuant to Section 280G of the Code.
3.21.10. REPORTABLE EVENTS
To the Knowledge of the Company, no Plan has experienced a
"reportable event" (as the term is defined in Section 4043(b) of ERISA) that is
not subject to an administrative or statutory waiver from the reporting
requirement.
3.21.11. FOREIGN PLAN
No Plan is a "qualified foreign plan" (as the term is defined
in Section 404A(e) of the Code), and no Plan is subject to the Laws of any
jurisdiction other than the United States of America or one of its political
subdivisions.
3.21.12. TAX FORM 5330
To the Knowledge of the Company, the Company has timely filed
and the Company has Furnished to the Investor true and complete copies of each
Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans) that the
Company has filed on any Plan. To the Knowledge of the Company, the Company has
no liability for Taxes required to be reported on Form 5330.
3.21.13. WELFARE PLANS
No Plan is a funded Welfare Plan.
3.21.14. POST-RETIREMENT PLANS
No Plan promises or provides post-retirement medical, life
insurance or other benefits due now or in the future to current, former or
retired employees of the Company (including any predecessor entities).
3.21.15. HEALTH CARE CONTINUATION COVERAGE REQUIREMENTS
To the Knowledge of the Company, all Welfare Plans and the
related trusts that are subject to Section 4980B(f) of the Code and Sections 601
through 607 of ERISA comply with and have been administered in compliance with
the health care continuation-coverage requirements of Section 4980B(f) of the
Code, Sections 601 through 607 of ERISA, and all proposed or final Treasury
regulations under Section 162 of the Code explaining those requirements.
3.21.16. FILED RETURNS AND REPORTS
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To the Knowledge of the Company, the Company has (i) filed or
caused to be filed all returns and reports on the Plans that they are required
to file, except where the failure to file would not have a Material Adverse
Effect and (ii) paid or made adequate provision for all Material fees,
interest, penalties, assessments or deficiencies that have become due pursuant
to those returns or reports or pursuant to any assessment or adjustment that
has been made relating to those returns or reports. To the Knowledge of the
Company, all other fees, interest, penalties and assessments that are payable
by or for the Company with respect to any Plan have been timely reported, fully
paid and discharged except for failures that would not have a Material Adverse
Effect. To the Knowledge of the Company, there are no unpaid fees, penalties,
interest or assessments relating to any Plan due from the Company or from any
other person that are or could become a lien on any Asset or could otherwise
have a Material Adverse Effect. To the Knowledge of the Company, the Company
has collected or withheld all amounts that are required to be collected or
withheld by them to discharge their obligations with respect to any Plan, and
all of those amounts have been paid to the appropriate governmental agencies or
set aside in appropriate accounts for future payment when due.
3.22. ENVIRONMENTAL
(a) The Company has complied and is in compliance with,
and the facilities occupied by the Company and all improvements thereon are in
compliance with, all Environmental Laws relating to or affecting the Company,
except where the failure to comply would not have a Material Adverse Effect.
(b) The Company has no liability under any Environmental
Law that would have a Material Adverse Effect and it is not responsible for any
liability of any other person under any Environmental Law. There are no pending
or, to the Knowledge of the Company, threatened actions, suits, orders, claims,
legal proceedings or other proceedings based on, nor has the Company or any
officer or director, directly or indirectly received any formal or informal
notice of any complaint, order, directive, citation, notice of responsibility,
notice of potential responsibility, or information request from any
governmental authority or any other person or entity or knows or suspects any
fact(s) which might reasonably form the basis for any such actions or notices
arising out of or attributable to: (i) the current or past presence, Release,
or threatened Release of Hazardous Materials at or from any part of the Real
Property; (ii) the off-site disposal or treatment of Hazardous Materials
originating on or from the Real Property or the business or Assets of the
Company; or (iii) any violation of Environmental Laws at any part of the Real
Property or arising from the Company's activities (or the activities of such
Person's predecessors in title) involving Hazardous Materials.
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(c) The Company has been duly issued, and currently has
and will maintain through the Closing Date, all permits, licenses, certificates
and approvals required under any Environmental Law with respect to its Assets
and business that the failure to have and maintain would cause a Material
Adverse Effect. A true and complete list of such permits, licenses,
certificates and approvals, all of which are valid and in full force and
effect, is set out in the Disclosure Schedule. Except in accordance with such
permits, licenses, certificates and approvals, to the Knowledge of the Company,
there has been no Release of Hazardous Materials at, or, under, or from the
Real Property occupied by the Company. There are no permits, licenses,
certificates or approvals required under any Environmental Law that are
non-transferable or which require consent, notification or other action to
remain in full force and effect following consummation of the transactions
contemplated by this Purchase Agreement.
(d) No Real Property owned or previously owned by the
Company and, to the Knowledge of the Company, no Real Property currently leased
by the Company from third parties, either (i) contains any underground
improvements, including but not limited to treatment or storage tanks, or
underground piping associated with such tanks, used currently or in the past
for the management of Hazardous Materials, or (ii) is or has been used as a
dump or landfill or consists of filled in land or wetlands.
(e) The Company has Furnished to the Investor
Representatives all of the information in its possession pertaining to the
environmental history of the Real Property currently and formerly occupied by
the Company and the operations of the Company (or any predecessor entity or
predecessor entitled to the Assets).
(f) To the Knowledge of the Company, neither PCBs nor
asbestos-containing materials are present on or in the Real Property occupied
by the Company.
(g) To the Knowledge of the Company, no Encumbrance in
favor of any person relating to or in connection with any Claim under any
Environmental Law has been filed or attached to Real Property currently leased
by the Company from a third party.
3.23. TRANSACTIONS WITH RELATED PARTIES
Except as set forth on the Disclosure Schedule, neither any
present or former officer, director or stockholder of the Company, nor any
Affiliates of the officers, directors or stockholders, are currently a party to
any transaction with the Company, including, without limitation, any Agreement
providing for the employment of, furnishing of services by, rental of Assets
from or to, or otherwise requiring payments to, any of the officers, directors,
stockholders or Affiliates.
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3.24. RESTRICTIONS AND CONSENTS
Except as set forth on the Disclosure Schedule, there are no
Agreements, Laws or other restrictions of any kind to which the Company is a
party or to which the Company's Assets are subject that would prevent or
restrict the execution, delivery or performance of this Purchase Agreement or
prohibit or limit the continued operation of the business of the Company after
the date hereof on substantially the same basis as heretofore operated, as a
result of the execution, delivery or performance of this Purchase Agreement.
The Disclosure Schedule lists all Agreements and Laws that require the consent
or acquiescence of any person or entity not party to this Purchase Agreement
with respect to any aspect of the execution, delivery or performance of this
Purchase Agreement by the Company.
3.25. AUTHORITY; AUTHORIZATION; NO CONFLICT
(a) The Company has all requisite corporate power and
authority to enter into this Purchase Agreement and the other Documents
contemplated hereby and to carry out its obligations hereunder and thereunder.
The execution, delivery and performance of this Purchase Agreement and the
other Documents contemplated hereby by the Company have been duly authorized by
all necessary corporate action. The issuance of the shares of Series A Stock to
be purchased by the Investors hereunder has been duly authorized by all
requisite corporate action of the Company and, upon delivery to the Investors
of certificates therefor against payment in accordance with the terms of this
Purchase Agreement, the shares of Series A Stock will (i) be validly issued,
fully paid and nonassessable, (ii) have the rights, preferences and privileges
described in Exhibit B hereto, (iii) be free and clear of preemptive rights,
(iv) subject to the Investors' representations and warranties contained herein,
be issued in compliance with the Securities Act and any applicable state
securities laws and the rules and regulations promulgated thereunder, and (v)
be free and clear of Encumbrances, other than Encumbrances that might have been
created by the Investors and the Encumbrances imposed under this Purchase
Agreement and the Documents contemplated hereby. The issuance of the Common
Stock issuable upon conversion of the Series A Stock has been duly authorized
by all requisite corporate action and such Common Stock has been reserved for
issuance upon conversion of the Series A Stock and, when issued upon conversion
of the Series A Stock in accordance with the terms of Exhibit B hereto, will be
(i) validly issued, fully paid and nonassessable, (ii) free and clear of
preemptive rights, (iii) issued in compliance with the Securities Act and any
applicable state securities laws and the rules and regulations promulgated
thereunder and (iv) free and clear of Encumbrances, other than Encumbrances
that might have been created by the Investors and the Encumbrances imposed
under this Purchase Agreement and the Documents contemplated hereby.
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(b) The execution, delivery and performance by the
Company of this Purchase Agreement and all other Documents contemplated hereby,
the fulfillment of and compliance with the respective terms and provisions
hereof and thereof, and the consummation by the Company of the transactions
contemplated hereby and thereby, do not and will not: (a) conflict with, or
violate any provision of, any Law having applicability to the Company or any of
its Assets, or any provision of the certificate or articles of incorporation or
bylaws of the Company; (b) conflict with, or result in any breach of, or
constitute a default under any Material Agreement to which the Company is a
party or by which the Company or any of its Assets may be bound; or (c) result
in or require the creation or imposition of or result in the acceleration of
any indebtedness, or of any Encumbrance of any nature upon, or with respect to
any of the Material Assets of the Company.
3.26. ABSENCE OF VIOLATION
The Company is not in violation of or default under, nor has
the Company breached, any term or provision of its certificate or articles of
incorporation or bylaws or any Material Agreement or restriction to which the
Company is a party or by which the Company is bound or any of its Material
Assets are bound or affected. Neither the Company nor any of its officers,
directors, employees or agents (or, to the Company's Knowledge, stockholders,
distributors, representatives or other persons acting on the express, implied
or apparent authority of such entity) have paid, given or received or have
offered or promised to pay, give or receive, any bribe or other unlawful,
questionable payment of money or other thing of value, any extraordinary
discount, or any other unlawful or unusual inducement, to or from any person,
business association or governmental official or entity in the United States or
elsewhere in connection with or in furtherance of the business of the Company
(including, without limitation, any offer, payment or promise to pay money or
other thing of value (a) to any foreign official or political party (or
official thereof) for the purposes of influencing any act, decision or omission
in order to assist the Company in obtaining business for or with, or directing
business to, any person, or (b) to any person, while knowing that all or a
portion of such money or other thing of value will be offered, given or
promised to any such official or party for such purposes. The business of the
Company is not in any manner dependent upon the making or receipt of such
payments, discounts or other inducements.
3.27. COMPLIANCE WITH LAW; APPROVALS
Except as set forth in the Disclosure Schedule:
(a) The operations of the Company have been conducted,
in all Material respects, in compliance with all Laws and regulations
applicable to the Company's business.
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(b) The Company has not received notice of any violation
(or of any investigation, inspection, audit, or other proceeding by any
governmental authority involving allegations of any violation) of any Law, nor
is it in material default with respect to any Law, and to the Knowledge of the
Company, no investigation, inspection, audit, or other proceeding by any
governmental authority involving allegations of violation of any Law is
threatened or contemplated;
(c) The Company has all licenses, franchises, permits,
authorizations or approvals from all governmental authorities ("Approvals")
required for the conduct of the business of the Company and the occupancy and
operation, for its present uses, of the real and personal property which the
Company owns or leases, except where the failure to have such Approvals would
not, individually or in the aggregate, have a Material Adverse Effect, and the
Company is not in violation of any such Approvals or any terms or conditions
thereof.
(d) All such Approvals are in full force and effect,
have been issued to and fully paid for by the holder thereof and, to the
Knowledge of the Company, no suspension or cancellation thereof has been
threatened; and
(e) No such Approvals will in any way be affected by, or
terminate or lapse by reason of, the transactions contemplated by this Purchase
Agreement or any of the other agreements contemplated hereunder or executed
herewith.
3.28. COPIES OF DOCUMENTS
True and complete copies of all Documents listed in the
Disclosure Schedule have been Furnished to the Investor Representatives.
3.29. BINDING OBLIGATION
This Purchase Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, is in full
force and effect and constitutes a legal, valid and binding obligation of, and
is legally enforceable against, the Company, and, to the Company's Knowledge,
the other parties thereto (except as enforceability may be limited or affected
by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws and equitable principles now or hereafter in effect and
affecting the rights and remedies of creditors generally); and each Document to
be executed by the Company pursuant hereto, when executed and delivered in
accordance with the provisions thereof, shall be a valid and binding obligation
of the Company, enforceable in accordance with its terms.
3.30. DISCLOSURE
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No representation or warranty by the Company in this Purchase
Agreement, and no Document Furnished or to be Furnished to the Investors
pursuant to this Purchase Agreement, contains or will contain any untrue or
misleading statement of a Material fact or omits or will omit any Material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading.
3.31. USE OF PROCEEDS
The Company shall use the proceeds from the sale of the
shares of Series A Stock solely to fund any acquisitions or capital expenditures
as approved by the Company's Board of Directors or for working capital or other
general corporate purposes.
3.32. SYSTEMS
Except as set forth in the Disclosure Schedule and with such
other exceptions as will not, individually or in the aggregate, have a Material
Adverse Effect, (i) all of the Systems services' and platform servers are
running, or peaking, at no higher than 60% of capacity, (ii) all of the Systems'
services are replicated in a redundant manner across available platform servers,
(iii) all remote physical points of presence ("POPs") are secure, conform to
equipment manufacturers' recommended environmental parameters, and contain an
uninterrupted power supply with a battery backup of at least 30 minutes, (iv)
the existing power plant at the Company's main location is equipped with an
uninterrupted power supply with a battery backup of at least 60 minutes, (v) all
deployed dial-in modem, modem shelf and corresponding technology conform to
applicable industry standards necessary to support traffic at a rate of 44.5
Mgbps or above, and (vi) all Systems owned, leased by or licensed to or by the
Company are Year 2000 Compliant.
3.33. CUSTOMERS
The Disclosure Schedule sets forth (a) the number of customers
served by the Company by type of business (i.e., segregated by the following
categories, if applicable to the Company: (i) shared hosting, (ii) dedicated
hosting, (iii) co-located hosting and (iv) application hosting) as of September
30, 1999 and the Company's standard rates for such customers for each type of
business; (b) for the period commencing January 1, 1998, the Company's monthly
churn rate (consisting of (i) cancellations of month-to-month service and/or
long-term subscription or service contracts prior to expiration, (ii)
termination of any such contracts, and (iii) non-renewal of any such contracts
upon expiration) by business type during each full calendar month prior to the
date hereof for the period commencing January 1, 1998; and (c) as of September
30, 1999, detail as to the amount of prepaid subscription or service contracts
and the amount of unearned revenue for all customer contracts
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with a remaining term of (i) less than or equal to 90 days, (ii) greater than
90 days and less than or equal to one year, (iii) greater than one year and
less than or equal to two years, (iv) greater than two years and less than or
equal to three years and (v) greater than three years.
3.34. COMPANY'S NAMES, BUSINESS AND LOCATION OF COMPANY ASSETS
The Company has conducted business under the names "Interland,
Inc." and "Cumberland Title and Closing Corporation" and no other names. The
Company is in the business of providing web hosting services. Other than
engaging in business as a real estate title company under the name "Cumberland
Title and Closing Corporation," the Company has not engaged in and does not
currently engage in any other business. The Company has not engaged in business
as a real estate title company at any time within the past ten (10) years. The
Company's chief executive office and principal place of business is located at
000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000. Substantially all of the Company's
physical Assets are located at the same address as its chief executive office
and the Company does not currently have any places of business other than at
such address or as disclosed in the Disclosure Schedule. Set forth in the
Disclosure Schedule is a complete and accurate listing of all locations at which
the Company has conducted business over the last ten (10) years.
3.35. SMALL BUSINESS CONCERN
The Company together with its "affiliates" (as that term is
defined in Section 121.103 of Title 13 of the Code of Federal Regulations) meets
the size standard requirements set forth in Title 13, C.F.R. ss. 121.301(c) as a
"small business concern" within the meaning of the Small Business Act of 1958,
as amended ("SBIA"). . The information pertaining to the Company set forth in
Small Business Administration Forms 480, 652 and 1031 delivered to each Investor
that is a Small Business Investment Company ("SBIC") licensed by the United
States Small Business Administration (each an "SBIC Purchaser") is accurate and
complete. Neither the Company nor any subsidiary of the Company presently
engages in, or shall hereafter engage in, any activities, nor shall the Company
or any subsidiary of the Company use the proceeds of the sale of the Series A
Stock directly or indirectly for any purpose for which an SBIC is prohibited
from providing funds by the regulations under the SBIA (the "SBIC Regulations")
(including, without limitation, 13 C.F.R. ss. 107.720). To the best knowledge of
the Company, each SBIC that owns any securities issued by the Company, together
with a description of the kinds and amounts of securities held, are listed on
the Disclosure Schedule.
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3.36. REAL PROPERTY HOLDING CORPORATION
The Company is not a United States Real Property Holding Corporation within the
meaning of Section 897(c) of the Code.
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents and warrants, severally and
not jointly, to the Company as follows:
4.1. ORGANIZATION AND STANDING
The Investor is duly organized, validly existing and in good
standing under the laws of the state or jurisdiction of its formation and each
has the full and unrestricted power and authority to enter into this Purchase
Agreement and to carry out the transactions contemplated hereby.
4.2. AUTHORIZATION
The execution, delivery and performance by that Investor of
this Purchase Agreement and all other Documents contemplated hereby, the
fulfillment of and the compliance with the respective terms and provisions
hereof and thereof, and the consummation by the Investor of the transactions
contemplated hereby and thereby have been duly authorized, and will not: (a)
conflict with, or violate any term or provision of the Investor's certificate
or agreement of limited partnership or other governing documents or (b)
conflict with, or result in any breach of, or constitute a default under, any
Agreement to which the Investor is a party or by which such Investor is bound.
No other action is necessary for the Investor to enter into this Purchase
Agreement and all other Documents contemplated hereby and to consummate the
transactions contemplated hereby and thereby.
4.3. BINDING OBLIGATION
This Purchase Agreement constitutes a valid and binding
obligation of the Investor, enforceable in accordance with its terms, is in
full force and effect and constitutes a legal, valid and binding obligation of,
and is legally enforceable against, the Company, and, to the Company's
Knowledge, the other parties thereto (except as enforceability may be limited
or affected by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws and equitable principles now or hereafter in
effect and affecting the rights and remedies of creditors generally). Each
Document to be executed by the Investor pursuant hereto, when executed and
delivered in accordance with the provisions hereof, shall be a valid and
binding obligation of the Investor, enforceable in accordance with its terms,
shall be in full force and effect and shall constitute a legal, valid and
binding
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obligation of, and shall be legally enforceable against, the Investor, and, to
the Investor's Knowledge, the other parties thereto (except as enforceability
may be limited or affected by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws and equitable
principles now or hereafter in effect and affecting the rights and remedies of
creditors generally).
4.4. NO REGISTRATION UNDER THE SECURITIES ACT
The Investor understands that the Series A Stock to be
purchased by it at Closing pursuant to the terms of this Purchase Agreement,
and the Common Stock of the Company into which the Series A Stock is
convertible, have not and will not be registered under the Securities Act or
any state securities laws and will be issued in reliance upon exemptions
contained in the Securities Act or interpretations thereof and in the
applicable state securities laws, and cannot be offered for sale, sold or
otherwise transferred unless the Series A Stock being acquired hereunder or the
Common Stock of the Company into which the Series A Stock is convertible
subsequently are so registered or qualify for exemption from registration under
the Securities Act.
4.5. ACQUISITION FOR INVESTMENT
The Series A Stock and the Common Stock issuable upon
conversion thereof, respectively, are being acquired under this Purchase
Agreement by the Investor in good faith solely for its own account, for
investment and not with a view toward distribution within the meaning of the
Securities Act. The Series A Stock will not be offered for sale, sold or
otherwise transferred by the Investor without either registration or exemption
from registration under the Securities Act and any applicable state securities
laws (and the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, as reasonably requested by the
Company).
4.6. EVALUATION OF MERITS AND RISKS OF INVESTMENT
The Investor has knowledge and experience in financial and
business matters such that it is capable of evaluating the merits and risks of
its investment in the Series A Stock being acquired hereunder. The Investor is
an "accredited investor" within the meaning of Rule 501(a) under the Securities
Act. The Investor understands and is able to bear any economic risks associated
with such investment (including, without limitation, the necessity of holding
the Series A Stock for an indefinite period of time, inasmuch as the Series A
Stock have not been registered under the Securities Act or any state securities
laws).
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4.7. ADDITIONAL INFORMATION
The Investor acknowledges that it has been afforded the
opportunity to ask questions and receive answers concerning the Company and to
obtain additional information that it has requested to verify the accuracy of
the information contained herein. Notwithstanding the foregoing, nothing
contained herein shall operate to modify or limit in any respect the
representations and warranties of the Company or to relieve it from any
obligations to the Investors for breach thereof or the making of misleading
statements of material fact or the omission of material facts in connection
with the transactions contemplated herein.
4.8. STOCK CERTIFICATE LEGEND
Each Investor acknowledges and agrees that each certificate
representing the Series A Stock and the Common Stock issuable upon conversion
thereof shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
CLOSING DELIVERABLES
Contemporaneously with the execution of this Agreement, the
Company shall deliver to the Investors the following:
5.1. OPINION OF COUNSEL
The Purchasers shall have received an opinion of Xxxxxxxxxx
Xxxxxxxx LLP, counsel to the Company, dated as of the Closing Date, to the
effect and in the form attached hereto as Exhibit D.
5.2. STOCKHOLDERS' AGREEMENT
Prior to or concurrently with Closing, the Company, certain
of the Company's securityholders and the Investors shall execute and deliver a
Stockholders' Agreement in the form attached hereto as Exhibit E.
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5.3. REGISTRATION RIGHTS AGREEMENT
Prior to or concurrently with Closing, the Company and the
Investors shall execute and deliver a Registration Rights Agreement in the form
attached hereto as Exhibit F.
5.4. CORPORATE DOCUMENTS
Concurrently with Closing, the Company shall have provided to
the Investors an incumbency certificate for the officers of the Company
executing this Purchase Agreement and any other documents pursuant hereto and a
copy of each of the following: (a) the certificate or articles of incorporation
of the Company and any other filings required to authorize the issuance of, and
designate the terms of, the Series A Stock, as certified by the Secretary of
State of the State of Georgia and by the secretary of the Company as being true
and complete as of the Closing Date; (b) certificates certifying that the
Company is in good standing (or its equivalent) in its state of incorporation
and in any jurisdiction where it is qualified to do business and in which the
Company maintains an office, in each case dated not more than ten days prior to
the Closing Date; (c) the Company's By-laws certified by the secretary of the
Company as being true and complete as of the Closing Date; and (d) a copy of
the resolutions of the Company's Board of Directors and, if necessary, the
Stockholders certified by the secretary of the Company as of the Closing Date
authorizing the execution, delivery and performance of this Purchase Agreement
and the issuance of the Series A Stock to the Investors pursuant hereto.
5.5. DOCUMENTS AT CLOSING
All documents required to be furnished by the Company to the
Investors prior to or at Closing shall have been so furnished.
5.6. CONSENTS
(a) The Investors shall have received all consents,
authorizations and approvals of governmental and private parties which are
required to be obtained in order to consummate the transactions contemplated
hereby, and such consents, authorizations and approvals shall be in full force
and effect on the Closing Date.
(b) The Company shall have received all consents,
authorizations and approvals of governmental and private parties which are
required to be obtained in order to consummate the transactions contemplated
hereby, and such consents, authorizations and approvals be in full force and
effect on the Closing Date.
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5.7. COMPOSITION OF THE BOARD OF DIRECTORS
The following individuals shall constitute the entire Board
of Directors of the Company (effective as of the Closing): Xxx Xxxxxxxxxx,
Xxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxxx X. Xxxxx, and Xxxxx X. Xxxxxxxxxxx.
5.8. INVESTOR REPRESENTATIVES LETTER
Prior to or concurrently with Closing, the Company shall have
delivered to the Investor Representatives a certificate substantially in the
form of Exhibit G.
5.9. GAVRANOVIC EMPLOYMENT AGREEMENT
Prior to or concurrently with Closing, the Company shall have
delivered to the Investor Representatives an executed employment agreement
between the Company and Xxx Xxxxxxxxxx in the form of Exhibit H.
5.10 XXXXXXXXX AGREEMENT
Prior to or concurrently with the Closing, the Company shall
have delivered to the Investor Representatives an executed agreement between
the Company and Xxxxxxxx Xxxxxxxxx in the form of Exhibit I.
All such documents shall be satisfactory in form and substance to the Investors
and their counsel.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION REMEDIES
6.1. SURVIVAL OF REPRESENTATIONS
All representations, warranties, covenants, and other
Agreements made by any party to this Purchase Agreement herein or pursuant
hereto shall also be deemed made on and as of the Closing Date as though such
representations, warranties, covenants, indemnities and other Agreements were
made on and as of such date, and all the representations, warranties,
covenants, indemnities and other Agreements shall survive the Closing Date for
a period of two years, except for the Company's indemnification of the Investor
Indemnified Persons pursuant to Section 6.2(a), (i) relating to the Company's
prior activities as a real estate title company, (ii) for any unlawful or
fraudulent actions taken by Xxxxxxxx Xxxxxxxxx prior to the date of this
Purchase Agreement, (iii) for any Claims which may be brought by Xxxxxxxx
Xxxxxxxxx against the Company or the Investors for any actions taken prior to
the date of this Purchase Agreement, and (iv) for any Claims
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arising out of the information contained in that certain side letter delivered
to the Investors by the Company on the date hereof, each of which shall survive
indefinitely without limitation.
6.2. AGREEMENT OF THE COMPANY AND THE INVESTORS TO INDEMNIFY
(a) Subject to the conditions and provisions of this
SECTION, the Company hereby agrees to indemnify, defend and hold harmless the
Investor Indemnified Persons from and against and in any respect of all Claims
asserted against, resulting to, imposed upon or incurred by the Investor
Indemnified Persons (whether such Claims are by, against or relate to the
Company or any other party, including a governmental entity), directly or
indirectly, by reason of or resulting from (i) any misrepresentation or breach
of any representation or warranty, or noncompliance with any covenants or other
Agreements, given or made by the Company in this Purchase Agreement or in the
Disclosure Schedule or Exhibits attached hereto or in any Document Furnished by
or on behalf of the Company pursuant to this Purchase Agreement, (ii) the
Company's prior activities as a real estate title company, (iii) any unlawful
or fraudulent actions taken by Xxxxxxxx Xxxxxxxxx prior to the date of this
Purchase Agreement, (iv) any Claims which may be brought by Xxxxxxxx Xxxxxxxxx
against the Company or the Investors for any actions taken prior to the date of
this Purchase Agreement and (v) any Claims arising out of the information
contained in that certain side letter delivered to the Investors by the Company
on the date hereof.
(b) Subject to the conditions and provisions of this
Section 6, each Investor hereby, severally but not jointly, agrees to
indemnify, defend and hold harmless the Company Indemnified Persons from and
against and in any respect of all Claims asserted against, resulting to,
imposed upon or incurred by the Company Indemnified Persons, directly or
indirectly, by reason of or resulting from any misrepresentation or breach of
any representation or warranty, or noncompliance with any covenants or other
Agreements, given or made by the Investor in this Purchase Agreement or in any
Document Furnished by or behalf of the Investor pursuant to this Purchase
Agreement.
(b) Except as set forth below, it shall be a condition
to the right of any Indemnified Person to indemnification pursuant to this
SECTION that such Indemnified Person shall assert a Claim for indemnification
within two years following the Closing Date. Notwithstanding the foregoing, (x)
any Claim made pursuant to this SECTION relating to a breach of SECTION 3.9 may
be made throughout the period ending one year following the latter of (i) the
expiration of all applicable statutes of limitation (including extensions), and
(ii) the final determination of (and the expiration of time to appeal) any
audit, examination, investigation or other proceeding relating to Taxes covered
by, or any Claim under,
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SECTION 3.9 hereof and (y) any Claim made pursuant to this SECTION 6 relating
to the items set forth in SECTION 6.2(A)(II) through (V) may be made at any
time.
6.3. CONDITIONS OF INDEMNIFICATION
The obligations and liabilities of the Company and each
Investor hereunder with respect to their respective indemnities pursuant to
this SECTION , resulting from any Claim shall be subject to the following
additional terms and conditions:
(a) The indemnified party shall give prompt written
notice to the indemnifying party of any Claim which is asserted against,
resulting to, imposed upon or incurred by such indemnified party and which may
give rise to liability of the indemnifying party pursuant to this SECTION ,
stating (to the extent known or reasonably anticipated) the nature and basis of
such Claim and the amount thereof. The omission of the indemnified party so to
notify the indemnifying party of any Claim shall not relieve the indemnifying
party from any liability it may have hereunder except to the extent that (i)
the liability was caused or increased by such omission, or (ii) the ability of
the indemnifying party to reduce or defend against the liability was materially
adversely affected by the omission.
(b) The indemnifying party may engage counsel with
respect to any such Claim, the representation (including the compromise or
settlement of any Claim) to be undertaken on behalf of the indemnified party,
and the indemnified party shall have right to approve counsel (which approval
shall not be unreasonably withheld). The indemnified party shall have the prior
right to approve any compromise or settlement of any Claim by counsel engaged
by the indemnifying party (which approval shall not be unreasonably withheld),
unless such compromise or settlement contains a full release of the indemnified
party of any and all liability and does not impose any restrictions on the
indemnified party or its business or affairs. In the event the indemnifying
party elects not to undertake the defense of the Claim by its own counsel, or
in the event that the indemnified party reasonably believes that representation
by counsel designated by the indemnifying party would be inappropriate due to
actual or potential conflicts of interest, the indemnified party will undertake
the defense thereof by one counsel or other representatives designated by it,
at the cost and expense of the indemnifying party. In any event, the
indemnifying parties will advance all expenses of the indemnified parties as
incurred.
6.4. SPECIFIC PERFORMANCE
In addition to any other remedies which the Investors may
have at law or in equity, the Company hereby acknowledges that the Series A
Stock and the Company are unique, and that the harm to the Investors resulting
from breaches by the Company of its obligations cannot be adequately
compensated by damages.
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Accordingly, the Company agrees that the Investors shall have the right to have
all obligations, undertakings, Agreements, covenants and other provisions of
this Purchase Agreement specifically performed by the Company and that the
Investors shall have the right to seek an order or decree of such specific
performance in any of the courts of the United States of America or of any
state or other political subdivision thereof.
6.5. REMEDIES CUMULATIVE
The remedies provided herein shall be cumulative and shall
not preclude the assertion by the Company or the Investors of any other rights
or the seeking of any other remedies against the other, or their respective
successors or assigns.
6.6. LIMITS FOR RECOVERY OF LOSSES
The Company shall not be liable as the indemnifying party for
any Claims under this Section 6 unless and until the aggregate amount of all
Claims hereunder by the Investors or other indemnified parties equals or
exceeds $250,000, in which case the Company shall be liable for all Claims in
the aggregate in excess of $250,000. The limitations set forth in the prior
sentence shall not apply to Claims against the Company relating to the items
set forth in SECTION 6.2(A)(II) through (V) and the Investor Indemnified
Persons shall be entitled to indemnification from the Company for any Claims
relating to the items set forth in SECTION 6.2(A)(II) through (V) without any
limitation. In all cases, and notwithstanding anything herein to the contrary,
the Company shall be subject to a maximum aggregate limit of all Claims against
it equal to the aggregate purchase price paid by the Investors for the Series A
Stock purchased hereunder.
MISCELLANEOUS
7.1. ADDITIONAL ACTIONS AND DOCUMENTS
After Closing, each of the parties hereto hereby agrees to
take or cause to be taken such further actions, to execute, deliver and file or
cause to be executed, delivered and filed such further Documents, and will
obtain such consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this Purchase
Agreement.
7.2. NO BROKERS
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Each of the parties hereto represents and warrants to the
other parties (and to each of them) that, other than fees payable to Chase
Securities Inc., for which the Company shall be solely responsible, such party
has not engaged any broker, finder or agent in connection with the transactions
contemplated by this Purchase Agreement and has not incurred (and will not
incur) any unpaid liability to any broker, finder or agent for any brokerage
fees, finders' fees or commissions, with respect to the transactions
contemplated by this Purchase Agreement. Each party agrees to indemnify, defend
and hold harmless each of the other parties from and against any and all claims
asserted against such parties for any such fees or commissions by any persons
purporting to act or to have acted for or on behalf of the indemnifying party.
7.3. JURY WAIVER
THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN AN ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS PURCHASE AGREEMENT OR ANY OF THE
TRANSACTIONS OR AGREEMENTS CONTEMPLATED HEREBY.
7.4. PUBLICITY
Neither the Investors nor the Company shall issue any press release or make any
public disclosure regarding the transaction contemplated hereby unless such
press release or public disclosure is approved by those parties expressly
mentioned by name in the press release in advance. Notwithstanding the
foregoing, each of the parties hereto may, in documents required to be filed by
it with the SEC or other regulatory bodies, make such statements with respect
to the transactions contemplated hereby as each may be advised by counsel as
legally necessary or advisable and may make such disclosure as it is advised by
its counsel as required by law.
7.5. EXPENSES
Subject to the provisions of this SECTION 7.5, each party
hereto shall pay its own expenses incident to this Purchase Agreement and the
transactions contemplated hereunder, including all legal and accounting fees
and disbursements, except that the Company agrees to pay all reasonable out-of
pocket expenses of the Investors, including the legal fees and expenses of
Xxxxx & Xxxxxxx L.L.P., not to exceed an aggregate of $50,000 without the prior
approval of the Company.
7.6. ASSIGNMENT
Each Investor shall have the right to assign its rights and
obligations under this Purchase Agreement, in whole or in part, to any
Affiliate of an Investor
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or to designate any of its Affiliates (to the extent permitted by Law) to
receive directly the shares of Series A Stock to be purchased hereunder or to
exercise any of the rights of such Investor, or to perform its obligations,
provided that such assignee shall have been deemed to have made the
representations and warranties contained in Article 4 hereof. The Company shall
not assign its rights and obligations under this Purchase Agreement, in whole
or in part, whether by operation of law or otherwise, without the prior written
consent of the Investor Representatives, and any such assignment contrary to
the terms hereof shall be null and void and of no force and effect. In no event
shall the assignment by the Company or any Investor of its rights or
obligations under this Purchase Agreement, whether before or after the Closing,
release the Company or the Investor from their respective liabilities and
obligations hereunder.
7.7. ENTIRE AGREEMENT; AMENDMENT
This Purchase Agreement, including the Disclosure Schedule,
the Exhibits and other Documents referred to herein or Furnished pursuant
hereto, constitutes the entire Agreement among the parties hereto with respect
to the transactions contemplated herein, and it supersedes all prior oral or
written Agreements, commitments or understandings with respect to the matters
provided for herein. No amendment or modification of this Purchase Agreement
shall be valid or binding unless set forth in writing and duly executed and
delivered by the Company and the Investor Representatives.
7.8. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Purchase Agreement or under
any other Documents Furnished in connection with or pursuant to this Purchase
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege, or the exercise of any other right,
power or privilege. No waiver shall be valid against any party hereto unless
made in writing and signed by the party against whom enforcement of such waiver
is sought and then only to the extent expressly specified therein.
7.9. SEVERABILITY
If any part of any provision of this Purchase Agreement or
any other Agreement or document given pursuant to or in connection with this
Purchase Agreement shall be invalid or unenforceable in any respect, such part
shall be
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ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining parts of such provision or the remaining
provisions of this Purchase Agreement.
7.10. GOVERNING LAW
This Purchase Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware (excluding the choice of law
rules thereof).
7.11. NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Purchase Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telecopy addressed as follows:
(i) If to Crest:
Crest Communications Holdings LLC
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxxx
If to Boulder:
Boulder Ventures Ltd.
0000 Xxxxxx Xxxxx Xxxx.
Xxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
If to the other Investors, then to the names and
addresses set forth on the books and records of the
Company
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in each case with a copy (which shall not constitute notice)
to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy No: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
(ii) If to the Company:
Interland, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxx Xxxxxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request, or communication which shall be hand
delivered, sent, mailed or telecopied in the manner described above, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or (with respect to a telecopy) the answerback or
confirmation being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
7.12. HEADINGS
Section headings contained in this Purchase Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Purchase Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
7.13. EXECUTION IN COUNTERPARTS
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To facilitate execution, this Purchase Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signatures of, or on behalf of, each party, or that the signatures of
all persons required to bind any party, appear on each counterpart; but it
shall be sufficient that the signature of, or on behalf of, each party, or that
the signatures of the persons required to bind any party, appear on one or more
of the counterparts. All counterparts shall collectively constitute a single
Agreement. It shall not be necessary in making proof of this Purchase Agreement
to produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
7.14. LIMITATION ON BENEFITS
The covenants, undertakings and agreements set forth in this
Purchase Agreement shall be solely for the benefit of, and shall be enforceable
only by, the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns (including
specifically, without limitation, any third party transferees acquiring shares
of Series A Stock purchased by the Investors pursuant hereto).
7.15. BINDING EFFECT
Subject to any provisions hereof restricting assignment, this
Purchase Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and assigns.
7.16. ADDITIONAL COVENANTS OF THE COMPANY
(a) The Company covenants and agrees that, no later than
January 31, 2000, it will have initiated and kept open for thirty days a
rescission offer to those holders of its Common Stock who (i) reside in the
states of Delaware, Florida, Georgia, Idaho, New Jersey, New York and Virginia
and (ii) purchased the Common Stock between November 1, 1998 and November 1,
1999, which rescission offer satisfies the requirements of those states in
which the rescission offer was made.
(b) The Company covenants and agrees to obtain, within a
reasonable period of time following the Closing, directors' and officers'
liability insurance covering the Company's officers and the members of its board
of directors with such coverage, with such insurer and with such terms and
conditions as may be reasonably acceptable to the Board of Directors of the
Company.
7.17. KEY MAN LIFE INSURANCE
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The Company covenants and agrees, that within a reasonable period of time
following the Closing, it will obtain key man life insurance on the life of Xxx
Xxxxxxxxxx in the amount of $5 million, with all proceeds payable to the
Company.
7.18. PROPRIETARY INFORMATION AGREEMENT
The Company covenants and agrees that (i) all future officers, directors,
employees and consultants of the Company will execute and deliver to the
Company an agreement regarding assignment to the Company of any Intellectual
Property arising for services performed for the Company by such persons, and
(ii) it will enter into written agreements with all third parties having access
to the Company-owned Intellectual Property in connection with the disclosure
to, or use or appropriation by, those third parties, of Intellectual Property
owned by the Company that is not otherwise protected by a patent, a patent
application, copyrights, trademark or legal scheme.
7.19. SBIC COVENANTS OF THE COMPANY
(a) Without the consent of each SBIC Purchaser, the Company will not issue
securities to any SBIC in the future if such issuance would cause such SBIC
Purchaser to be deemed to be a member of an "Investor Group" in "Control" of the
Company (as such terms are defined in 13 C.F.R. ss. 107.865).
(b) The Company shall permit representatives of each SBIC Purchaser access
to the Company's records. Upon the request of an SBIC Purchaser or any of its
affiliates, the Company will furnish to such person all information reasonably
requested by it in order for it to comply with its recordkeeping, reporting and
other obligations under the SBIA or any SBIC Regulation. Each SBIC Purchaser
agrees to keep such information confidential, except as required to be
disclosed under the SBIA or any SBIC Regulation.
(c) For a period of one year following the date hereof, neither the
Company nor any of its subsidiaries (if any) will change its business activity
if such change would render the Company ineligible to receive financial
assistance from an SBIC under the SBIA and the regulations thereunder (within
the meanings of 13 C.F.R. xx.xx. 107.720 and 107.760(b)).
(d) The Company will at all times comply with the non-discrimination
requirements of 13 C.F.R., Parts 112, 113 and 117.
7.20. REGULATORY COMPLIANCE COOPERATION
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(a) In the event that an SBIC Purchaser determines that it has a
Regulatory Problem (as defined below), such SBIC Purchaser shall have the right
to transfer its Shares without regard to any restriction on transfer, provided,
however, that no such transfer will be made to any of the Company's competitors
and that each SBIC Purchaser will ensure that such transfers are made in
compliance with the federal securities laws, and the Company shall (i) take all
such actions as are reasonably requested by such SBIC Purchaser in order to
effectuate and facilitate any transfer by such SBIC Purchaser of any securities
of the Company then held by such SBIC Purchaser to any person designated by
such SBIC Purchaser or (ii) use its best efforts to take all actions reasonably
necessary to address and cure such Regulatory Problem.
(b) For purposes of this Agreement, a "Regulatory Problem" means any set
of facts or circumstances wherein it has been asserted by any governmental
regulatory agency (or an SBIC Purchaser reasonably believes that there is a
substantial risk of such assertion) that such SBIC Purchaser is not entitled to
hold, or exercise any significant right with respect to, the underlying common
stock of the Company.
7.21. REAL PROPERTY HOLDING CORPORATION COVENANT
The Company will use best efforts to avoid being a United States Real Property
Holding Company within the meaning of Section 897(c) of the Code.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have
caused this Stock Purchase Agreement to be duly executed on their behalf, as of
the day and year first hereinabove set forth.
THE COMPANY:
INTERLAND, INC.
By: /s/ Xxx Xxxxxxxxxx
--------------------------------------------
Name: Xxx Xxxxxxxxxx
Title: President and Chief Executive
Officer
THE INVESTORS
CREST COMMUNICATIONS
PARTNERS L.P.
By: Crest Communications Holdings LLC
Its: Authorized Representative
By: /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Director
CREST ENTREPRENEURS FUND
L.P.
By: Crest Communications Holdings LLC
Its: Authorized Representative
By: /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Director
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BOULDER VENTURES III, L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Partner
BANCBOSTON VENTURES INC.
By: /s/ M. Xxxxx XxXxxxxxx
--------------------------------------------
Name: M. Xxxxx XxXxxxxxx
Title: Vice President
PRIVATE EQUITY CO-INVEST LTD.
By: VBTC Management, Ltd.
Its: Sole Director
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman
BOULDER VENTURES III (ANNEX), L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Partner
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EXHIBIT A
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
DEFINITIONS
"AFFILIATE" means: (a) with respect to a person, any member
of such person's family; (b) with respect to an entity, any officer, director,
stockholder, partner or investor of or in such entity or of or in any Affiliate
of such entity; and (c) with respect to a person or entity, any person or
entity which directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with such person or
entity.
"AGREEMENT" means any concurrence of understanding and
intention between two or more persons (or entities) with respect to their
relative rights and/or obligations or with respect to a thing done or to be
done (whether or not conditional, executory, express, implied, in writing or
meeting the requirements of contract), including, without limitation,
contracts, leases, promissory notes, covenants, easements, rights of way,
covenants, commitments, arrangements and understandings.
"ASSETS" means assets of every kind and everything that is or
may be available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property.
"BOULDER" means Boulder Ventures III, L.P., a Delaware
limited partnership.
"CLAIMS" means all demands, claims, actions or causes of
action, assessments, losses, damages (including, without limitation, diminution
in value), liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and disbursements.
"CLOSING" means the Closing of the sale of shares of Series A
Stock to the Investors under this Purchase Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection therewith.
"COMMON STOCK" means the Company's Common Stock, no par value
per share.
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"COMPANY" means Interland, Inc., a Georgia corporation.
"COMPANY INDEMNIFIED PERSON" means the Company and its
Affiliates, employees, representatives, agents, officers, directors and each
other person who "controls" the Company within the meaning of the Securities
Act.
"CONTROL" means possession, directly or indirectly, of power
to direct or cause the direction of management or policies (whether through
ownership of voting securities, by Agreement or otherwise).
"CREST" means Crest Communications Partners L.P., a Delaware
limited partnership and Crest Entrepreneurs Fund L.P., a Delaware limited
partnership.
"DEFINED BENEFIT PLAN" means a Plan that is or was a "defined
benefit plan" as such term is defined in Section 3(35) of ERISA.
"DISCLOSURE SCHEDULE" means the disclosure schedule
identified as the Disclosure Schedule to the Purchase Agreement.
"DOCUMENTS" means any paper or other material (including,
without limitation, computer storage media) on which is recorded (by letters,
numbers or other marks) information that may be evidentially used, including,
without limitation, legal opinions, mortgages, indentures, notes, instruments,
leases, Agreements, insurance policies, reports, studies, Financial Statements
(including, without limitation, the notes thereto), other written financial
information, schedules, certificates, charts, maps, plans, photographs,
letters, memoranda and all similar materials.
"DOL" means the Department of Labor or its successors.
"ENCUMBRANCE" means, with respect to any Asset, any mortgage,
lien, pledge, encumbrance, security interest, deed of trust, option,
encroachment, reservation, order, decree, judgment, condition, restriction,
charge, Agreement, claim or equity of any kind.
"ENVIRONMENTAL LAWS" means any Laws (including, without
limitation, the Clean Air Act, the Clean Water Act, the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act and the Hazardous Materials Transportation Act),
now or hereafter in effect relating to the generation, production,
installation, use, storage, treatment, transportation, release, threatened
release, or disposal of Hazardous Materials, noise control, or the protection
of human health, safety, natural resources, animal health or welfare, or the
environment.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"ESOP" means an "employee stock ownership plan" as such term
is defined in Section 407(d)(6) of ERISA or Section 4975(e)(7) of the Code.
"EXHIBIT" means an exhibit attached to the Agreement.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION
3.6.
"FURNISHED" means supplied, delivered or provided in any way,
including through attorneys, employees or officers.
"HAZARDOUS MATERIALS" means any wastes, substances,
radiation, or materials (whether solids, liquids or gases) (i) which are
hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or
mutagenic; (ii) which are or become defined as a "pollutants" "contaminants",
"hazardous materials," "hazardous wastes," "hazardous substances," "toxic
substances," "radioactive materials," "solid wastes," or other similar
designations in, or otherwise subject to regulation under, any Environmental
Laws; (iii) without limitation, which contain polychlorinated biphenyls (PCBs),
asbestos, lead-based paints, urea-formaldehyde foam insulation, and petroleum
or petroleum products (including, without limitation, crude oil or any fraction
thereof) or (iv) which pose a hazard to human health, safety, natural
resources, industrial hygiene, or the environment, or an impediment to working
conditions.
"INDEMNIFIED PERSON" means an Investor Indemnified Person or
a Company Indemnified Person, as applicable.
"INTELLECTUAL PROPERTY" means all patents, trademarks, trade
names, service marks, trade dress, logos, domain names, copyrights and any
applications or registrations therefore, maskworks, schematics, technology,
know-how, trade secrets, formulas, compositions, technical data, designs,
drawings, specifications, inventory, inventions, ideas, algorithms, processes,
computer software programs and applications (in both source code and object
code form), and tangible or intangible proprietary information or material and
all reissues, extensions or renewals thereof.
"INVESTOR INDEMNIFIED PERSONS" means each Investor and its
Affiliates, employees, representatives, agents, representatives, officers,
partners, members and directors, and each other person who "controls" an
Investor within the meaning of the Securities Act.
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"INVESTOR REPRESENTATIVES" means Crest and Boulder.
"KNOWLEDGE" means to the actual knowledge of the party making
the representation, and, in the case of the Company, "Knowledge" shall mean the
actual Knowledge of the officers and directors of the Company.
"LAWS" means all foreign, federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified persons or
entities and to the businesses and Assets thereof (including, without
limitation, Laws relating to securities registration and regulation; the sale,
leasing, ownership or management of real property; employment practices, terms
and conditions, and wages and hours; building standards, land use and zoning;
safety, health and fire prevention; and environmental protection, including
Environmental Laws).
"MATERIAL" means material to the Company and its
Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" means any material adverse effect
on the Assets, properties, business, operations, prospects, condition
(financial or otherwise) or liabilities of the Company and its Subsidiaries,
taken as a whole.
"MATERIAL ASSET" means an Asset having a value equal to or in
excess of $25,000, or Assets having an aggregate value in excess of $50,000.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as such
term is defined in Section 3(37) of ERISA.
"ORDINARY COURSE OF BUSINESS" means ordinary course of the
Company's business consistent with past practices and business operations.
"OTHER ARRANGEMENT" means a benefit program or practice
providing for bonuses, incentive compensation, vacation pay, severance pay,
insurance, reimbursement or any other perquisite or benefit (including, without
limitation, any fringe benefit under Section 132 of the Code) to employees,
officers or independent contractors that is not a Plan.
"PBGC" means the Pension Benefit Guaranty Corporation or its
successor.
"PENSION PLAN" means an "employee pension benefit plan" as
such term is defined in Section 3(2) of ERISA.
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52
"PERSON" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or entity, government or
department or agency of a government.
"PLAN" means any plan, program or arrangement, whether or not
written, that is or was an "employee benefit plan" as such term is defined in
Section 3(3) of ERISA and (a) which was or is established or maintained by the
Company or any Subsidiary (or any predecessor entity); (b) to which the Company
or any Subsidiary (or any predecessor entity) contributed or was obligated to
contribute or to fund or provide benefits; or (c) which provides or promises
benefits to any person who performs or who has performed services for the
Company or any Subsidiary and because of those services is or has been (i) a
participant therein or (ii) entitled to benefits thereunder.
"QUALIFIED PLAN" means a Pension Plan that satisfies, or is
intended by the Company to satisfy, the requirements for tax qualification
described in Section 401 of the Code.
"REAL PROPERTY" means any real property owned, operated or
used by the Company as of the date hereof or previously.
"RELEASE" means any emission, spill, seepage, leak, escape,
leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal,
or release of Hazardous Materials from any source (including without limitation
the Real Property) into or upon the environment, including the air, soil,
improvements, surface water, groundwater, the sewer, septic system, or waste
treatment, storage, or disposal systems at, on, above, or under the Real
Property.
"SECTION" means a Section (or a subsection) of this Purchase
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"SERIES A STOCK" means the Company's Series A Convertible
Participating Preferred Stock, no par value per share.
"SHARES" means the Series A Stock being purchased by the
Investors pursuant to the terms of this Purchase Agreement.
"SUBSIDIARY" means a corporation or other entity of which at
least 50% of the outstanding securities or other interests having rights to
vote or otherwise exercise Control are held, directly or indirectly, by the
Company.
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53
"SYSTEMS" means the infrastructure used to provide web
hosting services, including network components, communications facilities,
servers, services and service platforms, power plants, data processing
platforms, MIS systems, office automation systems and internal LAN network
management systems.
"TAXES" means all federal, state, local and foreign taxes
(including, without limitation, income, profit, franchise, sales, use, real
property, personal property, ad valorem, excise, employment, social security
and wage withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration fees,
withholdings, or other similar charges of every kind, character or description
imposed by any governmental or quasi-governmental authorities, and any
interest, penalties or additions to tax imposed thereon or in connection
therewith.
"TAX RETURNS" means all federal, state, local, foreign and
other applicable tax returns, declarations of estimated tax reports required to
be filed by the Company or any Subsidiary (without regard to extensions of time
permitted by law or otherwise).
"TITLE I PLAN" means an Employee Plan that is subject to
Title I of ERISA.
"WELFARE PLAN" means an "employee welfare benefit plan" as
such term is defined in Section 3(1) of ERISA.
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EXHIBIT B
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
TERMS OF SERIES A PREFERRED STOCK
55
EXHIBIT C
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
INVESTORS
56
EXHIBIT D
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
FORM OF XXXXXXXXXX XXXXXXXX LLP LEGAL OPINION
57
EXHIBIT E
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
STOCKHOLDERS' AGREEMENT
58
EXHIBIT F
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
REGISTRATION RIGHTS AGREEMENT
59
EXHIBIT G
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
INVESTOR REPRESENTATIVES' LETTER
60
EXHIBIT H
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
FORM OF XXX XXXXXXXXXX EMPLOYMENT AGREEMENT
61
EXHIBIT I
TO STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 2, 1999
FORM OF XXXXXXXXX AGREEMENT
