EXHIBIT 4
XXXXXXX.XXX, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of June 22, 1999 among XxxXxxx.xxx, Inc.,
a Delaware corporation (the "COMPANY") and the persons and entities listed on
the Schedule of Investors attached hereto as Exhibit A (the "INVESTORS").
SECTION I
AUTHORIZATION AND SALE OF PREFERRED STOCK
1.1 AUTHORIZATION. The Company will authorize the sale and issuance of
up to 4,650,000 shares of its Series D Preferred Stock, (the "SHARES"), having
the rights, privileges and preferences as set forth in the Amended and Restated
Certificate of Incorporation (the "CERTIFICATE") in the form attached to this
Agreement as Exhibit B.
1.2 SALE OF PREFERRED. Subject to the terms and conditions hereof, at
the Closing (as defined below) the Company will severally issue and sell to each
of the Investors and the Investors will severally buy from the Company the total
number of Shares set forth opposite such Investor's name in column 2 of the
Schedule of Investors attached hereto as Exhibit A for the aggregate purchase
price calculated on a per share purchase price of $6.52, set forth in column 3
opposite the Investor's name in the Schedule of Investors. The Company's
agreements with each of the Investors are separate agreements, and the sales to
each of the Investors are separate sales.
SECTION II
CLOSING DATE; DELIVERY
2.1 CLOSING. The purchase and sale of the Shares shall take place in a
closing (the "CLOSING") at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 650 Page Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000
on or about June 15, 1999 or at such other time as the Company and the Investors
mutually agree upon.
2.2 SUBSEQUENT CLOSING. The Company may sell up to the balance of the
authorized shares of the Series D Preferred Stock not sold at the initial
Closing at one or more subsequent closings on the terms contained herein and in
the exhibits hereto for a price per share of not less than $6.52, provided that
any such subsequent closing(s) for the purchase and sale of Shares are completed
not later than fifteen days after the date of this Agreement. Upon completion of
each subsequent closing, if any, additional purchasers of shares of Series D
Preferred Stock and each such subsequent closing shall be considered "Investors"
and a "Closing," respectively, within the meaning of this Agreement.
2.3 DELIVERY. At the Closing, the Company will deliver to each Investor
a certificate, registered in such Investor's name, representing the number of
Shares to be purchased by such
Investor as specified in the Schedule of Investors, against payment of the
purchase price therefor by cancellation of indebtedness, by check payable to the
Company, by wire transfer in accordance with the Company's wiring instructions,
or by a combination thereof. Upon completion of the Closing, all purchasers of
Shares shall be considered "Investors" within the meaning of this Agreement.
SECTION III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit C (the "Schedule of Exceptions") attached hereto, the Company represents
and warrants to the Investors as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. The
Company has requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted, and
is in good standing in each jurisdiction where the failure to so qualify would
have a material adverse effect on its business or properties.
3.2 CORPORATE POWER. The Company will have at the Closing all requisite
legal and corporate power and authority to execute and deliver this Agreement
and any agreements set forth as exhibits hereto (collectively, the
"AGREEMENTS"), to sell and issue the Shares hereunder, to issue the Common Stock
issuable upon conversion of the Shares and to carry out and perform its
obligations under the terms of the Agreements.
3.3 CAPITALIZATION. The authorized capital stock of the Company will,
upon the filing of the Certificate, consist of 31,650,000 shares of Common Stock
(the "COMMON STOCK") and 20,176,616 shares of Preferred Stock (the "PREFERRED
STOCK"), 5,000,000 of which are designated Series A Preferred Stock, 5,776,616
of which are designated Series B Preferred Stock, 4,750,000 of which are
designated Series C Preferred Stock and 4,650,000 of which are designated Series
D Preferred Stock. Immediately prior to the Closing, 6,697,516 shares of Common
Stock will be outstanding, 4,444,545 shares of Series A Preferred Stock will be
outstanding. 5,684,024 shares of Series B Preferred Stock will be outstanding
and 4,650,269 shares of Series C Preferred Stock will be outstanding. The
Company has reserved 20,176,616 shares of Common Stock for issuance upon
conversion of the Preferred Stock. The Company has reserved 1,452,056 shares of
Common Stock for issuance to officers, directors, employees and consultants of
the Company pursuant to its 1997 Stock Plan duly adopted by the Board of
Directors and approved by the Company's stockholders (the "1997 Stock Plan"). Of
such reserved shares of Common Stock, options to purchase 1,310,535 shares have
been granted and are currently outstanding and 141,521 shares of Common Stock
remain available for issuance pursuant to the 1997 Stock Plan. All of the
outstanding shares of Common Stock, Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock are duly authorized, validly issued, fully
paid and nonassessable, and were issued in compliance with applicable federal
and state securities laws. The Shares, when issued pursuant to the terms of this
Agreement, will be duly authorized, validly issued, fully paid and nonassessable
and will be free
of restrictions on transfer except for such restrictions as are imposed by law
and the Agreements and free of any preemptive or similar rights other than those
arising under the Stockholders' Rights Agreement between the Company and certain
of its investors which rights will have been waived with respect to the issuance
of the Shares. Except those purchase rights, options and warrants as set forth
in Schedule 3.3 of the Schedule of Exceptions, there are no other options,
warrants or other rights (including conversion or preemptive rights) or
agreements outstanding to purchase any of the Company's authorized and unissued
capital stock. To the Company's knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates to
the voting or giving of written consents with respect to any security or by a
director of the Company.
3.4 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution,
delivery and performance of the Agreements by the Company, the authorization,
sale, issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) and the performance of all of the Company's
obligations under the Agreements has been taken or will be taken prior to the
Closing. The Agreements, when executed and delivered by the Company, shall
constitute valid and binding obligations of the Company, enforceable in
accordance with their terms. The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, will be fully paid and
nonassessable, and will have the rights, preferences and privileges described in
the Certificate; the Common Stock issuable upon conversion of the Shares has
been duly and validly reserved and, when issued in compliance with the
provisions of this Agreement and the Certificate, will be validly issued, and
will be fully paid and nonassessable; and the Shares and such Common Stock will
be free of any liens or encumbrances, assuming the Investors take the shares
with no notice thereof, other than any liens or encumbrances created by or
imposed upon the holders; provided, however, that the Shares (and the Common
Stock issuable upon conversion thereof) may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein.
3.5 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any term of its Certificate or Bylaws, or in any material respect
of any term or provision of any material mortgage, indebtedness, indenture,
contract, agreement, instrument, judgment, order or decree, and to its knowledge
is not in violation of any statute, rule or regulation applicable to the Company
where such violation would have a material adverse effect on the Company. The
execution, delivery and performance of and compliance with the Agreements, and
the issuance of the Shares and the Common Stock issuable upon conversion of the
Shares, have not resulted in and will not result in any material violation of,
or conflict with, or constitute with or without the passage of time and the
giving of notice a material violation or default under, the Company's
Certificate or Bylaws.
3.6 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares), or the consummation of
any other transaction contemplated hereby, except (a) filing of the Certificate
in the office of the Delaware Secretary of State and (b) qualification (or
taking such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of
the Shares (and the Common Stock issuable upon conversion of the Shares) under
applicable Blue Sky laws.
3.7 OFFERING. Subject to the accuracy of the Investors' representations
in Section 4 hereof, the offer, sale and issuance of the Shares to be issued in
conformity with the terms of this Agreement, and the issuance of the Common
Stock to be issued upon conversion of the Shares, constitute transactions exempt
from the registration requirements of Section 5 of the Securities Act of 1933,
as amended (the "SECURITIES ACT") and in compliance with applicable state
securities laws.
3.8 BROKERS OR FINDERS; OTHER OFFERS. The Company has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
3.9 INTELLECTUAL PROPERTY. The Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, tradenames, copyrights,
trade secrets, licenses, information and proprietary rights and processes
necessary for its business as currently conducted without any conflict with, or
infringement of, the rights of others. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses or arrangements of any kind
with respect to the patents, trademarks, service marks, tradenames, copyrights,
trade secrets, licenses, information, proprietary rights and process of any
other person or entity, except, in either case, for standard end-use, object
code, internal use software licenses and support maintenance agreements. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets or other
proprietary rights or processes of any other person or entity. The Company is
not aware that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of such employee's best efforts to promote the
interest of the Company or that would conflict with the Company's business.
Neither the execution or delivery of this Agreement, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as currently conducted, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions, or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any such employee is now obligated. The Company does not believe it is or will
be necessary to use any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company. Set
forth in Section 3.9 of the Schedule of Exceptions is a listing of all patents,
trademarks and licenses of the Company.
3.10 SUBSIDIARIES. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture or
partnership.
3.11 LITIGATION. There is no action, suit, proceeding or, to the
Company's knowledge, investigation pending or, to the Company's knowledge,
currently threatened against the
Company that questions the validity of this Agreement, the Amended and Restated
Stockholders' Rights Agreement, attached hereto as Exhibit D (the "STOCKHOLDERS'
RIGHTS AGREEMENT") and of even date herewith, or the right of the Company to
enter into each such agreement, or to consummate the transactions contemplated
hereby or thereby. The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality which prohibits the transactions contemplated by this
Agreement. There is no action, suit or proceeding by the Company currently
pending or which the Company currently intends to initiate. The foregoing
includes, without limitation, actions, suits, proceedings or investigations
pending or threatened (or any basis therefor) known to the Company involving the
prior employment of any of the Company's employees, their use in connection with
the Company's business of any information or techniques allegedly proprietary to
any of their former employees, or their obligations under any agreements with
prior employers.
3.12 RIGHTS OF REGISTRATION. Except as contemplated in the Stockholders'
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
3.13 CORPORATE DOCUMENTS. The Certificate and Bylaws of the Company are
in substantially the forms attached hereto as Exhibit B and Exhibit E,
respectively.
3.14 EMPLOYEE BENEFIT PLANS. The Company does not have any "employee
benefit" plan as defined in the Employee Retirement Income Security Act of 1974
("ERISA"). The Company is not, nor was it at any time, obligated to contribute
to any employee pension benefit plan which is or was a multi-employer plan as
defined in ERISA.
3.15 TAX RETURNS AND PAYMENTS. The Company has filed all tax returns and
reports as required by law. These returns and reports are true and correct in
all material respects. The Company has paid all taxes and other assessments due.
Except as would not have a material adverse effect on the Company, since the
date of the Financial Statements, the Company has not incurred any taxes,
assessments or governmental charges other than in the ordinary course of
business and the Company has made adequate provisions on its books of account
for all taxes, assessments and governmental charges with respect to its
business, properties and operations for such period. Except as would not have a
material adverse effect on the Company, the Company has withheld or collected
from each payment made to each of its employees, the amount of all taxes
(including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.
3.16 COMPLIANCE WITH LAWS. The Company has complied with and is not in
violation of any foreign, federal, state or local statute, law or regulation,
the violation of which would have a material adverse effect on the Company.
3.17 TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the
Company is in material compliance with such leases and holds a valid leasehold
interest free of any liens, claims or encumbrances.
3.18 NO CONFLICT OF INTEREST. Except as set forth on Schedule 3.18, the
Company is not indebted to any of its officers or directors or to their
respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business. None of the Company's officers or directors, or any members of
their immediate families, are indebted to or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated (other than the Company itself) or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company except that officers, directors and/or stockholders of the Company may
own stock in (but not to exceed two (2) percent of the outstanding capital stock
thereof) publicly traded companies that may compete with the Company. No officer
or director or any member of their immediate families is interested in any
material contract with the Company.
3.19 BOOKS AND RECORDS. The Company has made available to the Investors
all corporate and financial books and records of the Company which are current
in all material respects.
3.20 VOTING AGREEMENTS. To the knowledge of the Company, other than the
Stockholders' Rights Agreement, there is no stockholder agreement or voting
agreement or agreement or understanding between any stockholders or any other
persons that grants special rights with respect to any shares of the Company's
capital stock.
3.21 MATERIAL AGREEMENTS. Except as set forth in the Schedule 3.22, the
Company does not have any contract, agreement, lease or commitment, written or
oral, absolute or contingent, other than (i) contracts for the purchase of
supplies or services entered into in the ordinary course of business and that do
not involve more than $15,000 and do not extend for more than one year beyond
the date hereof, (ii) equipment leases entered into in the ordinary course of
business and that do not individually provide for rental payments of more than
$20,000 annually, (iii) contracts terminable by the Company on no more than
sixty days' notice without materially adverse cost or liability to the Company
and (iv) contracts expressly contemplated hereby. The Company has not engaged in
the past three (3) months in any substantive and material discussion (i) with
any representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such corporation or
corporations, (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Company or a transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of, or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
3.22 FINANCIAL STATEMENTS. The Company has delivered to each Investor
its unaudited balance sheet as of ___________, 1998 and unaudited statement of
income for the [_____]-month period ending on ___________, 1998 (collectively,
the "Financial Statements"), copies of which are attached hereto as Exhibit F.
The Financial Statements are in accordance with the books and records of the
Company and present fairly the financial condition and position of the Company
as of the statement date, and other dates therein specified; provided, however,
that the
unaudited interim financial statements are subject to normal recurring year-end
audit adjustments. The Company has made a good faith effort to prepare the
Financial Statements in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated and with each
other, and the unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. Except as set forth in the
Financial Statements, the Company has no material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to April 30, 1999 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Company will make a good faith effort to maintain a standard system of
accounting established and administered in accordance with generally accepted
accounting principles.
3.23 CHANGES. Except as would not have a material adverse effect on the
Company, since April 30, 1999 there has not been:
a. any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
b. any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted);
c. any waiver by the Company of a material debt owed to it;
d. any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted);
e. any material change to the Company in any compensation
arrangement or agreement with any employee;
f. any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
g. any resignation or termination of employment of any key officer
of the Company; and the Company does not know of the impending resignation or
termination of employment of any such officer;
h. receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
i. any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
j. any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
k. any declaration, setting aside or payment or other distribution
in respect of any of the Company's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by the Company;
l. to the Company's knowledge, any other event or condition of any
character that might materially and adversely affect the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted); or
m. any agreement or commitment by the Company to do any of the
things described in this Section 3.23.
3.24 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each employee,
officer and consultant of the Company has executed a Proprietary Information and
Inventions Agreement substantially in the form of Exhibit G attached hereto. The
Company is not aware that any of its employees or consultants is in violation
thereof and the Company will use its reasonable efforts to prevent any such
violation.
3.25 SECTION 83(b) ELECTIONS. To the Company's knowledge, all election
notices permitted by Section 83(b) of the Internal Revenue Code and any
analogous provisions of applicable state tax laws have been timely filed by all
employees who have purchased shares of the Company's common stock under
agreements that provide for the vesting of such shares.
3.26 DISCLOSURE. The Company has provided the Investors with the
information which the Investors have requested for deciding whether to acquire
the Shares. To the Company's knowledge, no representation or warranty of the
Company contained in this Agreement and the exhibits attached hereto or any
certificate furnished or to be furnished to the Investors at the Closing (when
read together) contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
3.27 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
3.28 DIVIDENDS. The Company has not declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock.
3.29 QUALIFIED SMALL BUSINESS STOCK. The Company represents and warrants
to the Investors that, to the best of its knowledge, the Shares should qualify
as "Qualified Small
Business Stock" as defined in Section 1202(c) of the Internal Revenue Code of
1986, as amended as of the date hereof.
3.30 LABOR AGREEMENTS. The Company is not bound by or subject to (and
none of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested or, to the knowledge of the Company, has sought
to represent any of the employees, representatives or agents of the Company. The
employment of each officer and employee of the Company is terminable at the will
of the Company. The Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment. The Company is not aware that any executive officer
or key employee intends to terminate their employment with the Company, nor does
the Company have a present intention to terminate the employment of any of the
foregoing. The employment of each officer and employee of the Company is
terminable at the will of the Company. The Company is not a party to or bound by
any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement, or other
employee compensation agreement.
3.31 PERMITS. The Company has all franchises, permits, license and any
similar authority necessary for the conduct of its business, the lack of which
could materially and adversely affect the business, properties, prospects, or
financial condition of the Company. The Company is not in default under any of
such franchises, permits, licenses or other similar authority.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby severally represents and warrants to the
Company with respect to the purchase of the Shares as follows:
4.1 EXPERIENCE. It has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
4.2 INVESTMENT. It is acquiring the Shares and the Common Stock
underlying the Shares for investment for its own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof. It understands that the Shares to be purchased and the
Common Stock underlying the Shares have not been, and will not be, registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Investor's representations as expressed herein.
4.3 ACCREDITED INVESTORS. The Investor is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
4.4 RULE 144. It acknowledges that the Shares and the underlying Common
Stock must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. It is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permit limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than one year after
a party has purchased and paid for the security to be sold, the sale being
effected through a "broker's transaction" or in transactions directly with a
"market maker" and the number of shares being sold during any three-month period
not exceeding specified limitations.
4.5 NO PUBLIC MARKET. It understands that no public market now exists
for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
4.6 ACCESS TO DATA. It has had an opportunity to discuss the Company's
business, management and financial affairs with its management. It has also had
an opportunity to ask questions of officers of the Company, which questions were
answered to its satisfaction. It understands that such discussions, as well as
any written information issued by the Company, were intended to describe certain
aspects of the Company's business but were not a thorough or exhaustive
description. The foregoing does not, however, limit or modify the
representations and warranties of the Company in Section III hereof, or the
right of the Investors to rely thereon.
4.7 AUTHORIZATION. This Agreement when executed and delivered by such
Investor will constitute a valid and legally binding obligation of the Investor,
enforceable in accordance with its terms.
4.8 BROKERS OR FINDERS. Each Investor has not, and will not, incur,
directly or indirectly, as a result of any action taken by such Investor, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.
4.9 TAX CONSEQUENCES; LEGAL REPRESENTATION. Each Investor has reviewed
with the Investor's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement (including any tax consequences that may result under recently enacted
tax legislation). Each Investor is relying solely on such advisors and not on
any statements or representations of the Company or any of its agents. Each
Investor understands that the Investor (and not the Company) shall be
responsible for the Investor's own tax liability that may arise as a result of
this investment or the transactions contemplated by this Agreement. Each
Investor understands that the law firm of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx is
acting as counsel to the Company in connection with the transactions
contemplated by this Agreement, and is not acting as counsel for the Investors.
SECTION V
CONDITIONS TO CLOSING OF INVESTORS
Each Investors' obligation to purchase Shares at the Closing is, at
the option of such Investor, subject to the fulfillment of the following
conditions on or before the Closing:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section III hereof shall be true and correct
in all material respects as of the Closing.
5.2 QUALIFICATIONS. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall be obtained and effective as of the
Closing.
5.3 OPINION OF COMPANY COUNSEL. The Investors shall have received from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel for the Company, an opinion, dated as
of the Closing, in substantially the form of Exhibit G.
5.4 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. The Company and
each of its employees shall have entered into the Company's standard form
Proprietary Information and Inventions Agreement, in substantially the form
provided to the Investors.
5.5 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing shall
have been performed or complied with.
5.6 BLUE SKY. With respect to the purchase of Shares by such Investor,
the Company shall have obtained all necessary Blue Sky law permits and
qualifications, or have the availability of exemptions therefrom, required by
any state for the offer and sale of the Shares and the Common Stock issuable
upon conversion of the Shares as contemplated herein.
5.7 AMENDED AND RESTATED CERTIFICATE. The Certificate shall have been
filed with the Delaware Secretary of State.
5.8 STOCKHOLDERS' RIGHTS AGREEMENT. The Company shall have delivered an
executed copy of the Stockholders' Rights Agreement and shall be bound thereby.
5.9 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Investors a certificate executed by the President of the Company, dated as of
the Closing, and certifying to the fulfillment of the conditions specified in
Sections 5.1 and 5.5 of this Agreement.
5.10 DELIVERY OF SHARE CERTIFICATES. The Company shall deliver, and the
Investors shall have received, the share certificate representing each such
Investor's purchase of the Series D Preferred Stock under this Agreement.
SECTION VI
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue any Shares at the Closing
is, at the option of the Company, subject to the fulfillment as of the Closing
of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by each Investor in Section IV hereof shall be true and correct
when made, and shall be true and correct on the date of the Closing.
6.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by each Investor on or prior to the Closing shall
have been performed or complied with in all material respects.
6.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the offer and sale of the Shares and the Common Stock
issuable upon conversion of the Shares as contemplated herein.
6.4 AMENDED AND RESTATED CERTIFICATE. The Certificate shall have been
filed with the Delaware Secretary of State.
6.5 STOCKHOLDERS' RIGHTS AGREEMENT. Each Investor shall have delivered
an executed copy of the Stockholders' Rights Agreement and shall be bound
thereby.
SECTION VII
AFFIRMATIVE COVENANTS OF THE COMPANY
7.1 COMPLIANCE WITH SECTION 1202(c) OF THE CODE. The Company hereby
agrees that as long as the Shares are held by the Investors (or a transferee in
whose hands such capital stock is eligible to qualify as a Qualified Small
Business Stock as defined in Section 1202(c) of the Code), the Company will
comply with all reporting and record-keeping requirements required of a
Qualified Small Business under the Code or regulations promulgated thereunder.
In addition, the Company shall submit to the Investors and to the Internal
Revenue Service any reports that may be required under Section 1202(d)(1)(C) of
the Code and any related Treasury Regulations. In addition, within ten (10) days
after any Investor has delivered to the Company a written request therefor the
Company shall deliver to such Investor a "QSBS Certificate" (the form of which
is attached hereto as Exhibit G) informing the Investor whether such Investor's
interest in the Company constitutes "Qualified Small Business Stock" as defined
in Section 1202(c) of the Code. The Company's obligation to furnish this QSBS
Certificate pursuant to this Section 7.1 shall continue until five (5) years
from the date hereof, notwithstanding the fact that a class of the Company's
stock may be traded on an established securities market during such period.
7.2 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. The Company
hereby agrees to enter into the Company's standard form Proprietary Information
and Inventions Agreement with each employee and consultant it hires hereafter.
7.3 1997 STOCK PLAN.
a. Except as otherwise determined by the Board of Directors:
(i) twenty-five percent (25%) of such shares issued under the
1997 Stock Plan shall vest on the first anniversary of the vesting commencement
date and the remainder shall vest at one forty-eighth (1/48) per month
thereafter;
(ii) such shares issued under the Stock Plan may not be
transferred prior to vesting;
(iii) in the event that an employee is terminated by the Company,
the Company shall have a right to repurchase at cost any unvested shares of
Common Stock issued under the 1997 Stock Plan held by such employee;
(iv) such shares issued under the 1997 Stock Plan shall not be
transferable for one hundred and eighty (180) days following the effective date
of an Initial Public Offering; and
(v) in the event of a Change of Control as defined in the
Certificate of the Company and the termination of an employee without cause, the
vesting on those shares issued under the 1997 Stock Plan held by such employee
shall accelerate by twelve (12) months.
SECTION VIII
MISCELLANEOUS
8.1 SURVIVAL OF WARRANTIES. The representations and warranties of the
Company and the Investors contained in and made pursuant to this Agreement shall
survive for a period of two (2) years after the execution and delivery of this
Agreement.
8.2 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of California as applied to agreements entered
into among California residents to be performed entirely within California. The
parties hereto hereby submit to the exclusive jurisdiction and venue of the
United States District Court for the Northern District of California.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of an Investor to purchase Shares shall not
be assignable without the consent of the Company.
8.4 ENTIRE AGREEMENT; AMENDMENT. The Agreements and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of 75% of the Common Stock issued or issuable
upon conversion of the Shares may, with the Company's prior written consent,
waive, modify or amend on behalf of all Investors, any provision hereof.
8.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
overnight courier or by facsimile upon proper confirmation of receipt, addressed
(a) if to an Investor, at such Investor's address or addresses set forth in
Exhibit A, or at such other address as such Investor shall have furnished to the
Company in writing, or (b) if to any other holder of any Shares, at such address
as such holder shall have furnished the Company in writing, or, until any such
holder so furnishes an address to the Company, then to and at the address of the
last holder of such Shares who has so furnished an address to the Company, or
(c) if to the Company, one copy should be sent to such address as the Company
shall have furnished to the Investors.
Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or
seventy-two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
8.6 EXPENSES. If the Closing is effected, the Company agrees to pay an
amount not to exceed $15,000 for fees of outside legal counsel to the Investors
arising in connection with the negotiation, execution and consummation of the
transactions contemplated by this Agreement. The Company shall not be
responsible for any other fees and expenses of the Investors, whether incurred
pursuant to the negotiation, execution and consummation of the transactions
contemplated by this Agreement or otherwise. In the event that the financing
does not close, the Company and each Investor shall bear its own legal and other
expenses incurred to date with respect to the transactions contemplated by this
Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Investors,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one and the same
instrument.
8.8 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
8.9 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement shall impair any such
right, power or remedy of such party nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party shall be cumulative
and not alternative.
8.10 FURTHER ASSURANCES. Each party hereto agrees to take such further
actions including the execution of such documents as may be necessary or
desirable, or reasonably requested by the other, in order to carry out the
purposes of this Agreement.
8.11 FINDER'S FEE. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. The Company agrees to indemnify and hold harmless each Investor for
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
8.12 LEGAL FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Series D
Preferred Stock Purchase Agreement on the day and year first set forth above.
"COMPANY"
XXXXXXX.XXX, INC.
a Delaware corporation
By: /s/
-----------------------------------
Xxxx Xxxxxxxx
Chief Executive Officer
"INVESTORS"
TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TCV II (Q), L.P.
a Delaware Limited Partnership
[Signature Page to XxxXxxx.xxx, Inc. Series D Stock Purchase Agreement]
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TCV II STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
[Signature Page to XxxXxxx.xxx, Inc. Series D Stock Purchase Agreement]
FOUNDATION CAPITAL II, L.P.
By: Foundation Capital Management II, LLC
Its: Manager
By: /s/
------------------------------------
Name:
Title:
FOUNDATION CAPITAL II ENTREPRENEURS FUND, LLC
By: Foundation Capital Management II, LLC
Its: Manager
By: /s/
------------------------------------
Name:
Title:
FOUNDATION CAPITAL II PRINCIPALS FUND, LLC
By: Foundation Management II, LLC
Its: Manager
By: /s/
------------------------------------
Name:
Title:
[Signature Page to XxxXxxx.xxx, Inc. Series D Stock Purchase Agreement]
