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Exhibit 10.23
LOANTRADER, INC.
F/K/A DENOVONET, INC.
SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
DATED FEBRUARY 1, 2000
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TABLE OF CONTENTS
Page
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1. Purchase and Sale of Stock.............................................................................. 1
1.1. Sale and Issuance of Series A Preferred Stock.................................................. 1
1.2. Closing........................................................................................ 1
2. Representations and Warranties of the Company........................................................... 1
2.1. Organization, Good Standing and Qualification.................................................. 2
2.2. Capitalization and Voting Rights............................................................... 2
2.3. Subsidiaries................................................................................... 3
2.4. Authorization.................................................................................. 3
2.5. Valid Issuance of Preferred and Common Stock................................................... 3
2.6. Governmental Consents.......................................................................... 3
2.7. Offering....................................................................................... 4
2.8. Litigation..................................................................................... 4
2.9. Proprietary Information Agreements............................................................. 4
2.10. Patents and Trademarks......................................................................... 4
2.11. Compliance with Other Instruments.............................................................. 5
2.12. Agreements; Action............................................................................. 5
2.13. Related-Party Transactions..................................................................... 6
2.14. Section 83(b) Elections........................................................................ 6
2.15. Financial Statements........................................................................... 6
2.16. Changes........................................................................................ 7
2.17. Tax Returns.................................................................................... 8
2.18. Permits........................................................................................ 9
2.19. Environmental and Safety Laws................................................................. 9
2.20. Disclosure.................................................................................... 9
2.21. Registration Rights........................................................................... 9
2.22. Corporate Documents; Minute Books............................................................. 9
2.23. Insurance..................................................................................... 9
2.24. Employee Benefit Plans........................................................................ 9
2.25. Labor Agreements and Actions.................................................................. 10
2.26. Assumptions or Guaranties of Indebtedness of Other Persons.................................... 10
2.27. Title to Property and Assets.................................................................. 10
2.28. No Undisclosed Agreements with Investors...................................................... 10
3. Representations and Warranties of the Investors........................................................ 10
3.1. Authorization................................................................................. 10
3.2. Purchase Entirely for Own Account............................................................. 11
3.3. Disclosure of Information..................................................................... 11
3.4. Investment Experience......................................................................... 11
3.5. Accredited Investor........................................................................... 11
3.6. Restricted Securities......................................................................... 11
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3.7. Further Limitations on Disposition............................................................ 12
3.8. Legends....................................................................................... 12
3.9. Tax Advisors.................................................................................. 12
3.10. Investor Counsel.............................................................................. 13
4. California Commissioner of Corporations................................................................ 13
4.1. Corporate Securities Law...................................................................... 13
5. Conditions of Each Investor's Obligations at Closing................................................... 13
5.1. Representations and Warranties................................................................ 13
5.2. Performance................................................................................... 13
5.3. Compliance Certificate........................................................................ 13
5.4. Qualifications................................................................................ 14
5.5. Proceedings and Documents..................................................................... 14
5.6. Proprietary Information Agreements............................................................ 14
5.7. Bylaws........................................................................................ 14
5.8. Board of Directors............................................................................ 14
5.9. Opinion of Company Counsel.................................................................... 14
5.10. Investors' Rights Agreement................................................................... 14
5.11. Stock Transfer and Co-Sale Agreement.......................................................... 14
5.12. Management Advisory Agreement................................................................. 14
5.13. Voting Agreement.............................................................................. 15
5.14. Conversion of Convertible Notes............................................................... 15
5.15. Concurrent Closing............................................................................ 15
6. Conditions of the Company's Obligations at Closing..................................................... 15
6.1. Representations and Warranties................................................................ 15
6.2. Payment of Purchase Price..................................................................... 15
6.3. Qualifications................................................................................ 15
6.4. Investors' Rights Agreement................................................................... 15
6.5. Stock Transfer and Co-Sale Agreement.......................................................... 15
6.6. Management Advisory Agreement................................................................. 15
6.7. Voting Agreement.............................................................................. 16
7. Miscellaneous.......................................................................................... 16
7.1. Survival...................................................................................... 16
7.2. Successors and Assigns........................................................................ 16
7.3. Governing Law................................................................................. 16
7.4. Titles and Subtitles.......................................................................... 16
7.5. Notices....................................................................................... 16
7.6. Finder's Fee.................................................................................. 16
7.7. Expenses...................................................................................... 17
7.8. Amendments and Waivers........................................................................ 17
7.9. Effect of Amendment or Waiver................................................................. 17
7.10. Severability.................................................................................. 17
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7.11. Aggregation of Stock.......................................................................... 17
7.12. Entire Agreement.............................................................................. 17
7.13. Counterparts.................................................................................. 17
7.14. Other Engagements and Activities.............................................................. 18
7.15. Use of Name................................................................................... 18
SCHEDULE A Schedule of Investors and Amount Invested
SCHEDULE B Schedule of Exceptions
EXHIBIT A Restated Certificate of Incorporation
EXHIBIT B Amended and Restated Investors' Rights Agreement
EXHIBIT C List of Stockholders
EXHIBIT D Opinion of Counsel for the Company
EXHIBIT E Amended and Restated Stock Transfer and Co-Sale Agreement
EXHIBIT F Management Advisory Agreement
EXHIBIT G Voting Agreement
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PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made on
the 1st day of February 2000, by and among LoanTrader, Inc. F/K/A DenovoNet,
Inc., a Delaware corporation (the "Company"), and the investors listed on
Schedule A hereto (each, an "Investor" and collectively, the "Investors"). THE
PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1. Sale and Issuance of Series A Preferred Stock.
(a) The Company shall adopt and file with the Secretary of State of
Delaware on or before the Closing (as defined below) the Restated Certificate of
Incorporation in the form attached hereto as Exhibit A (the "Restated
Certificate").
(b) Subject to the terms and conditions of this Agreement, the
Investors agree, severally and not jointly, to purchase at the Closing (as
defined below) and the Company agrees to sell and issue to the Investors at the
Closing, that number of shares of the Company's Series A Preferred Stock set
forth opposite each Investor's name on Schedule A hereto for the purchase price
set forth thereon.
1.2. Closing. The purchase and sale of the Series A Preferred Stock
shall take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 A.M., on or before February 1,
2000, or at such other time and place as the Company and Investors acquiring in
the aggregate more than half the shares of Series A Preferred Stock sold
pursuant hereto mutually agree upon orally or in writing. At the Closing the
Company shall deliver to each Investor a certificate representing the Series A
Preferred Stock that such Investor is purchasing against payment of the purchase
price therefor by check, wire transfer, cancellation of indebtedness (including
accrued interest) or any combination thereof. In the event that payment by an
Investor is made, in whole or in part, by cancellation of indebtedness, then
such Investor shall surrender to the Company for cancellation at the Closing any
evidence of such indebtedness or shall execute an instrument of cancellation in
form and substance acceptable to the Company.
1.3 Use of Proceeds. The net proceeds from the sale of the Series
A Preferred Stock to the Investors hereunder shall be used for marketing,
technology development, working capital and other general corporate purposes.
Pending utilization for such purposes, the Company shall, (I) invest the net
proceeds in short-term, interest-bearing government securities or certificates
of deposit or their equivalent issued by a bank or trust company organized under
the laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $100,000,000 or (ii) invest the net
proceeds as otherwise approved by the Board of Directors.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor, except as set forth on a Schedule of
Exceptions (the
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"Schedule of Exceptions") furnished each Investor and special counsel for the
Investors prior to execution hereof and attached hereto as Schedule B, which
exceptions shall be deemed to be representations and warranties as if made
hereunder the following. As used in Article 2 (except Sections 2.1 and 2.2) the
term "Company" includes the wholly owned subsidiary ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. that
was merged into the Company on December 29, 1999.
2.1. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties.
2.2. Capitalization and Voting Rights. The authorized capital of the
Company will consist immediately after giving effect to the Closing of:
(a) Preferred Stock. Fourteen Million Five Hundred Thousand
(14,500,000) shares of Preferred Stock, par value $0.001 (the "Preferred
Stock"), of which Fourteen Million Five Hundred Thousand (14,500,000) shares
have been designated Series A Preferred Stock (the "Series A Preferred Stock")
and Thirteen Million Nine Hundred Sixty-seven Thousand Five Hundred and
Forty-three (13,967,543) of which will be sold pursuant to this Agreement. The
rights, privileges and preferences of the Series A Preferred Stock will be as
stated in the Company's Restated Certificate.
(b) Common Stock. Thirty One Million (31,000,000) shares of common
stock, par value $0.001 ("Common Stock"), of which Nine Million Three Hundred
Three Thousand Seven Hundred Thirty-one (9,303,731) shares are issued and
outstanding.
(c) Stockholders. The outstanding shares of Common Stock are owned by
the stockholders and in the numbers specified in Exhibit C hereto.
(d) Outstanding Common Stock. The outstanding shares of Common Stock
are all duly and validly authorized and issued, fully paid and nonassessable,
and were issued in compliance with all applicable state and federal laws
concerning the issuance of securities.
(e) Capitalization. Except for (i) the conversion privileges of the
Series A Preferred Stock to be issued under this Agreement, (ii) warrants to
purchase an aggregate of 518,750 shares of Common Stock have been issued to the
warrantholders listed on Schedule 2.2, (iii) the rights listed on Schedule 2.2
of the Schedule of Exceptions, and (iv) agreements to issue options to purchase
1,001,545 shares of Common Stock granted to employees, officers, directors or
consultants pursuant to the 1999 Stock Option/Stock Issuance Plan and 2000 Stock
Option/Stock Issuance Plan adopted by the Company (collectively the "Option
Plans"), there are not outstanding any options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock. In addition to the
aforementioned options, the Company has reserved an additional 4,093,470 shares
of its Common Stock for purchase upon exercise of options to be granted in the
future
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under the Option Plans. The Company is not a party or subject to any
agreement or understanding, and, 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.
2.3. Subsidiaries. The Company does not presently 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,
partnership, or similar arrangement.
2.4. Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Investors' Rights Agreement (as
defined below), the Management Advisory Agreement (as defined below), and the
Stock Transfer and Co-Sale Agreement (as defined below) and the Voting Agreement
(as defined below) (the "Investors' Rights Agreement," the "Management Advisory
Agreement," the "Voting Agreement" and the "Stock Transfer and Co-Sale
Agreement" are referred to collectively as the "Related Documents") and the
performance of all obligations of the Company hereunder and thereunder, and the
authorization (or reservation for issuance), sale and issuance of the Series A
Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion of the Series A Preferred Stock has been taken or will be taken prior
to the Closing. This Agreement and the Related Documents each constitute valid
and legally binding obligations of the Company, enforceable in accordance with
their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Investors' Rights Agreement may be limited by applicable
federal or state securities laws.
2.5. Valid Issuance of Preferred and Common Stock. The Series A
Preferred Stock that is being purchased by the Investors hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and will be free of restrictions on transfer, other than
restrictions on transfer under this Agreement and the Related Documents and
under applicable state and federal securities laws. The Common Stock issuable
upon conversion of the Series A Preferred Stock purchased under this Agreement
has been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Restated Certificate, will be duly and validly issued,
fully paid and nonassessable and will be free of restrictions on transfer, other
than restrictions on transfer under this Agreement and the Related Documents and
under applicable state and federal securities laws.
2.6. Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for such filings required pursuant to
applicable federal and state securities laws and blue sky laws, which filings
will be effected within the required statutory period.
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2.7. Offering. Subject in part to the truth and accuracy of each
Investor's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Series A Preferred Stock as contemplated by this
Agreement are exempt from the registration requirements of the Securities Act of
1933, as amended (the "Act"), and the qualification or registration requirements
of the Law or other applicable blue sky laws, specifically including exemption
from the qualification requirements of the California Corporations Code by
virtue of Section 25102(f) thereof. Neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemptions.
2.8. Litigation. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement or the Related Documents or the
right of the Company to enter into such agreement or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the
prospects, business, assets or condition of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware of any basis for the foregoing. The foregoing includes,
without limitation, actions, suits, proceedings or investigations pending or
threatened (or any basis therefor known to the Company) involving any of the
officers or directors of the Company or 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. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9. Proprietary Information Agreements. Each employee, officer (other
than the Secretary) and consultant of the Company has executed a Proprietary
Information and Inventions Agreement in the form provided to special counsel to
the Investors. The Company, after reasonable investigation, is not aware that
any of its employees, officers or consultants are in violation thereof, and the
Company will use its best efforts to prevent any such violation.
2.10. Patents and Trademarks. The Company possesses (i) to its
knowledge (but without having conducted any special investigation or patent
search) all patents, patent rights and (ii) all trademarks, trademark rights,
service marks, service ▇▇▇▇ rights, trade names, trade name rights and
copyrights (collectively, the "Intellectual Property") necessary for its
business without any conflict with or infringement of the valid rights of others
and the lack of which could materially and adversely affect the operations or
condition, financial or otherwise, of the Company, and the Company has not
received any notice of infringement upon or conflict with the asserted rights of
others. The Schedule of Exceptions contains a complete list of all trademark and
patent and pending patent applications of the Company. The Company has a
valuable body of trade secrets, including know-how, concepts, and other
technical data (the "Proprietary Information") for the development, deployment
and marketing of its services. The Company has the right to use the Proprietary
Information free and clear of any rights, liens, encumbrances or claims of
others, except that the possibility exists that other persons may have
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independently developed trade secrets or technical information similar or
identical to those of the Company. The Company is not aware of any such
independent development nor of any misappropriation of its Proprietary
Information. 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 his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business. Neither the execution nor the delivery of this Agreement or
the Related Documents, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the best of 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 to which any of such employees is now
obligated. The Company does not believe it is or will be necessary to utilize
any inventions of any of its employees (or people it currently intends to hire)
made prior to their employment by the Company.
2.11. Compliance with Other Instruments. The Company is not in
violation of any provision of its Restated Certificate or Bylaws nor in any
material respect of any instrument, judgment, order, writ, decree or contract,
statute, rule or regulation to which the Company is subject and a violation of
which would have a material adverse effect on the condition, financial or
otherwise, or operations of the Company. The execution, delivery and performance
of this Agreement and the Related Documents and the consummation of the
transactions contemplated hereby and thereby will not result in any such
violation, or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision or an event
that results in the creation of any lien, charge or encumbrance upon any assets
of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to the Company, its business or operations or any of its assets or properties.
2.12. Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and by the
Related Documents, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or by which it is bound that may involve (i) obligations (contingent
or otherwise) of, or payments to the Company, in excess of $25,000, other than
obligations of, or payments to, the Company arising from purchase or sale
agreements entered into in the ordinary course of business, (ii) the license of
any patent, copyright, trade secret or other proprietary right to or from the
Company, other than licenses arising from the purchase of "off the shelf" or
other standard products, or (iii) provisions restricting or affecting the
development, manufacture or distribution of the Company's products or services,
or (iv) indemnification by the Company with respect to infringements of
proprietary rights, other than indemnification obligations arising from purchase
or sale agreements entered into in the ordinary course of business.
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(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $25,000 or, in the case of
indebtedness and/or liabilities individually less than $25,000, in excess of
$50,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company is not a party to and is not bound by any contract,
agreement or instrument, or subject to any restriction under its Restated
Certificate or Bylaws that adversely affects its business as now conducted or as
proposed to be conducted, its properties or its financial condition.
(f) The Company has not engaged in the past three (3) months in any
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.
2.13. Related-Party Transactions. No employee, officer or director of
the Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees, officers or directors of the Company and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company. No member of the immediate family of any officer or director
of the Company is directly or indirectly interested in any material contract
with the Company.
2.14. Section 83(b) Elections. To the best of the Company's knowledge,
all individuals who have purchased unvested shares of the Company's Common Stock
have timely filed elections under Section 83(b) of the Code and any analogous
provisions of applicable state tax laws.
2.15. Financial Statements. The Company has delivered to the Investor
its unaudited financial statements (balance sheet and statement of operations,
statement of
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stockholders' equity and statement of cash flows) at November 30, 1999 and for
the eleven months then ended (the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated and
with each other, except that unaudited Financial Statements may not contain all
footnotes required by generally accepted accounting principles. The Financial
Statements fairly present the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein, subject in the
case of unaudited Financial Statements to normal year-end audit adjustments.
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 November 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 prospects 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 maintains and will continue to maintain
a standard system of accounting established and administered in accordance with
generally accepted accounting principles.
2.16. Changes. Since November 30, 1999, there has not been:
(a) any change in the assets, liabilities, financial condition,
prospects 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, prospects or operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(c) any waiver by the Company of a valuable right or 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, prospects or operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(e) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(f) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
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(g) any resignation or termination of employment of any key officer of
the Company; and the Company, to the best of its knowledge does not know of the
impending resignation or termination of employment of any such officer;
(h) material change in any compensation arrangement or agreement with
any employee;
(i) receipt of notice that there has been or is threatened to be a loss
of, or material order cancellation by, any major customer of the Company;
(j) 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;
(k) 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 made in the ordinary course of its business
(l) 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;
(m) to the best of the Company's knowledge, any other event or
condition of any character that could reasonably be expected to have a material
adverse effect on the assets, properties, financial condition, prospects or
operating results or business of the Company (as such business is presently
conducted and as it is proposed to be conducted); or
(n) any agreement or commitment by the Company to do any of the things
described in this Section 2.15.
2.17. Tax Returns. 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 those
contested by it in good faith which are listed in the Schedule of Exceptions.
The provision for taxes of the Company as shown in the Financial Statements is
adequate for taxes due or accrued as of the date thereof. The Company has not
elected pursuant to the Internal Revenue Code of 1986, as amended ("Code"), to
be treated as a Subchapter S corporation or a collapsible corporation pursuant
to Section 341(f) or Section 1362(a) of the Code, nor has it made any other
elections pursuant to the Code (other than elections which relate solely to
methods of accounting, depreciation or amortization) which would have a material
effect on the Company, its financial condition, its business as presently
conducted or proposed to be conducted or any of its properties or material
assets. The Company has never had any tax deficiency proposed or assessed
against it and has not executed any waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. None of the
Company's federal income tax returns and none of its state income or franchise
tax or sales or use tax returns has ever been audited by governmental
authorities. Since the date of the Financial Statements, the Company has not
incurred any taxes,
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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. 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.
2.18. Permits. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business as currently
conducted, the lack of which could materially and adversely affect the business,
properties or financial condition of the Company. The Company is not in default
in any material respect under any of such franchises, permits, licenses or other
similar authority.
2.19. Environmental and Safety Laws. The Company is not in violation of
any applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
2.20. Disclosure. The Company has fully provided each Investor with all
the information that such Investor has requested for deciding whether to
purchase the Series A Preferred Stock. Neither this Agreement (including all the
exhibits and schedules hereto) nor any other statements or certificates made or
delivered in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading in light of the circumstances under which they were
made.
2.21. Registration Rights. Except as provided in the Investors' Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.22. Corporate Documents; Minute Books. Except for amendments
necessary to satisfy representations and warranties or conditions contained
herein (the forms of which amendments have been approved by the Investors), the
Restated Certificate and Bylaws of the Company are in the form previously
provided to special counsel for the Investors. The minute books of the Company
provided to the Investors contain a complete summary of all meetings of
directors and stockholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.
2.23. Insurance. The Company has procured fire and casualty insurance
policies with such coverages in amounts (subject to reasonable deductibles)
customary for companies similarly situated.
2.24. Employee Benefit Plans. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
9.
14
2.25. Labor Agreements and Actions. 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 Company's
knowledge, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the Company's knowledge, threatened, that could have a
material adverse effect on the assets, properties, financial condition,
prospects or operating results or business of the Company, nor is the Company
aware of any labor organization activity involving its employees. The Company is
not aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any 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. To its knowledge, the Company has complied in all
material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.
2.26. Assumptions or Guaranties of Indebtedness of Other Persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including, without limitation liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in any person or otherwise to assure any
creditor against loss) any indebtedness of any other person.
2.27. Title to Property and Assets.. The property and assets the
Company owns are owned by the Company free and clear of all mortgages, liens,
loans and encumbrances, except (i) for statutory liens for the payment of
current taxes that are not yet delinquent, and (ii) for liens, encumbrances and
security interests that arise in the ordinary course of business and minor
defects in title, none of which, individually or in the aggregate, 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, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances, subject to clauses (i) and (ii) above.
2.28. No Undisclosed Agreements with Investors.. The Company has not
entered into any agreement with any of the Investors other than this Agreement,
the Related Documents and the agreements disclosed on Schedule 2.13.
3. Representations and Warranties of the Investors. Each Investor
severally and not jointly hereby represents, warrants and covenants that:
3.1. Authorization. Such Investor has full power and authority to enter
into this Agreement and the Related Documents to which each Investor is a party,
and each such agreement constitutes its valid and legally binding obligation,
enforceable in accordance with its terms.
10.
15
3.2. Purchase Entirely for Own Account. This Agreement is made with
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series A Preferred Stock to be received by such Investor and
the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in or otherwise distributing the same. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation's to such person or to any third person,
with respect to any of the Securities.
3.3. Disclosure of Information. Such Investor believes it has received
all the information it considers necessary or appropriate for deciding whether
to purchase the Series A Preferred Stock. Such Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series A Preferred
Stock and the business, properties, prospects and financial condition of the
Company. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of the
Investors to rely thereon.
3.4. Investment Experience. Such Investor is an investor in securities
of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Series A Preferred Stock. If other
than an individual, such Investor also represents it has not been organized for
the purpose of acquiring the Series A Preferred Stock.
3.5. Accredited Investor. Such Investor is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6. Restricted Securities. Such Investor understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Act only in certain limited circumstances. In the absence of an effective
registration statement covering the Securities (or the Common Stock issued on
conversion thereof) or an available exemption from registration under the Act,
the Series A Preferred Stock (and any Common Stock issued on conversion thereof)
must be held indefinitely. In this connection, such Investor represents that it
is familiar with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act, including without limitation
the Rule 144 condition that current information about the Company be available
to the public. Such information is not now available and the Company has no
present plans to make such information available.
11.
16
3.7. Further Limitations on Disposition. Without in any way limiting
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors' Rights Agreement, and:
(a) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
(b) (i) Such Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if requested by
the Company, such Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company that such disposition will not
require registration of such shares under the Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer to any wholly owned subsidiary or parent of, or to any corporation or
entity that is, within the meaning of the Act, controlled by or under common
control with, the transferring Investor, for a transfer by an Investor that is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his or her spouse or to the siblings, lineal descendants or
ancestors of such partner or his or her spouse, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if he or she
were an original Investor hereunder.
3.8. Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the Securities Act
of 1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
3.9. Tax Advisors. Such Investor has reviewed with such Investor's own
tax advisors the federal, state and local tax consequences of this investment,
where applicable, and the transactions contemplated by this Agreement. Each such
Investor is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents and understands that each
such Investor (and not the Company) shall be responsible for such
12.
17
Investor's own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.
3.10. Investor Counsel. Such Investor acknowledges that such Investor
has had the opportunity to review this Agreement, the exhibits and the schedules
attached hereto and the transactions contemplated by this Agreement with such
Investor's own legal counsel. Each such Investor is relying solely on such
Investor's legal counsel and not on any statements or representations of the
Company or any of the Company's agents, including ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, for legal advice with respect to this investment or the transactions
contemplated by this Agreement. Nothing contained in this Section 3.10 is
intended to affect, limit or qualify the opinion of ▇▇▇▇▇▇▇. Phleger & ▇▇▇▇▇▇▇▇
LLP tendered to the Investors pursuant to Section 5.9 below.
4. California Commissioner of Corporations.
4.1. Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
5. Conditions of Each Investor's Obligations at Closing. The
obligations of each Investor under subsection 1.1(b) of this Agreement are
subject to the fulfillment on or before Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent in writing thereto:
5.1. Representations and Warranties. The representations and warranties
of the Company contained in Section 2 shall be true on and as of each Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such Closing.
5.2. Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each Closing.
5.3. Compliance Certificate. The President of the Company shall deliver
to each Investor at the Closing a certificate stating that the conditions
specified in Sections 5.1 and 5.2 have been fulfilled and stating that there
shall have been no adverse changes in the business, affairs, operations,
properties, assets, prospects or condition of the Company since the date of the
Financial Statements.
13.
18
5.4. 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
Securities pursuant to this Agreement shall be duly obtained and effective as of
each Closing.
5.5. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at each Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Investors' special counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request. This may include, without limitation, good standing certificates and
certification by the Company's Secretary regarding the Company's Certificate of
Incorporation and Bylaws and Board of Director and stockholder resolutions
relating to this transaction.
5.6. Proprietary Information Agreements. The Investors shall have
received evidence that each key employee of and consultant to the Company has
entered into a Proprietary Information and Inventions Agreement in the form
previously provided to special counsel for the Investors.
5.7. Bylaws. The Bylaws of the Company shall provide that the Board of
Directors of the Company shall consist of not less than three (3) nor more than
seven (7) members;
5.8. Board of Directors. The Company shall have taken all necessary
corporate action such that immediately following the Closing, the directors of
the Company shall be ▇▇▇▇ Le, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
5.9. Opinion of Company Counsel. Each Investor shall have received from
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an opinion, dated as
of such Closing, in the form attached hereto as Exhibit "D."
5.10. Investors' Rights Agreement. The Company and each Investor and
other parties thereto shall have entered into the Amended and Restated
Investors' Rights Agreement (the "Investors' Rights Agreement") restating the
terms of the existing Investors' Rights Agreement in the form attached as
Exhibit "B."
5.11. Stock Transfer and Co-Sale Agreement. The Company and each
Investor and each of the other parties thereto shall have entered into the
Amended and Restated Stock Transfer and Co-Sale Agreement (the "Stock Transfer
and Co-Sale Agreement") amending and restating the terms of the existing Stock
Transfer and Co-Sale Agreement in the form attached as Exhibit "E."
5.12. Management Advisory Agreement. The Company and Equifin Capital,
LLC, a Delaware limited liability company ("Equifin) shall have entered into the
Management
14.
19
Advisory Agreement (the "Management Advisory Agreement") in the form attached as
Exhibit "F."
5.13. Voting Agreement. Each of the Company's stockholders and each
Investor who is participating in such Closing shall have executed a Voting
Agreement (the "Voting Agreement") in the form attached as Exhibit "H."
5.14. Conversion of Convertible Notes. Each of the outstanding
Convertible Notes issued by the Company in a total aggregate principal balance
of $877,000 shall have been converted into Series A Preferred Stock in
accordance with their terms, except that ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be permitted to
convert $50,000 and receive repayment of the balance of $50,000 under his
Convertible Note at the Closing.
5.15. Concurrent Closing. Each of the other Investors shall have
concurrently funded their investment in the Series A Preferred Stock in the
amounts set forth on Schedule A hereto.
6. Conditions of the Company's Obligations at Closing. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:
6.1. Representations and Warranties. The representations and warranties
of the Investor contained in Section 3 shall be true on and as of such Closing
with the same effect as though such representations and warranties had been made
on and as of such Closing.
6.2. Payment of Purchase Price. At the Closing, the Investors shall
have delivered the purchase price specified in Section 1.2, and Investors shall
collectively have acquired and paid for at the Closing at least NINE MILLION
shares of Series A Preferred Stock hereunder.
6.3. 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
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
6.4. Investors' Rights Agreement. The Company and each Investor shall
have entered into the Investors' Rights Agreement.
6.5. Stock Transfer and Co-Sale Agreement. The Company, each Investor
and each of the other parties thereto shall have entered into the Stock Transfer
and Co-Sale Agreement.
6.6. Management Advisory Agreement. The Company and Equifin shall have
entered into the Management Advisory Agreement.
15.
20
6.7. Voting Agreement. Each of the Company's stockholders and each
Investor shall have executed the Voting Agreement.
7. Miscellaneous.
7.1. Survival. The warranties, representations and covenants of the
Company and Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of the Investors or the Company.
7.2. Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.5. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the address
as set forth on the signature page hereof or at such other address as such party
may designate by ten days advance written notice to the other parties hereto.
7.6. Finder's Fee. Except as disclosed in the Schedule of Exceptions
which discloses a commission to be paid to Sekits Capital, each party represents
that it neither is nor will be obligated for any finders' fee or commission in
connection with this transaction. Each Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which such Investor or any of its
officers, partners, employees or representatives is responsible. The Company
agrees to indemnify and hold harmless each Investor from any liability for any
commission or compensation in the nature of a finders' 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.
16.
21
7.7. Expenses. Irrespective of whether the Closing is effected, each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement, except that
if the Closing occurs, the Company shall reimburse the Investors for the fees of
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and other (non-legal) professional fees and costs incurred in
connection with this transaction in an amount not to exceed $50,000 upon
presentation of evidence of reasonably satisfactory of the out-of-pocket
expenses incurred by Investors. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, or any of the Related
Documents or the Restated Certificate, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
7.8. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Common Stock not previously sold to the public that is issued or issuable upon
conversion of the Series A Preferred Stock sold pursuant to this Agreement. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities and the Company.
7.9. Effect of Amendment or Waiver. Each Investor acknowledges that by
the operation of Section 7.8 hereof the holders of a majority of the Common
Stock not previously sold to the public that is issued or issuable upon
conversion of the Series A Preferred Stock will have the power to diminish or
eliminate all rights of such Investor under this Agreement.
7.10. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.11. Aggregation of Stock. All shares of the Series A Preferred Stock
or Common Stock issued upon conversion thereof held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
7.12. Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties 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.
7.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17.
22
7.14. Other Engagements and Activities. The investments in the Company
being made by The ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, Inc., Stone Street Fund 2000, L.L.C., and
Bridge Street Special Opportunities Fund 2000, L.L.C. (each a "GS Entity")
pursuant to this Agreement, and any subsequent investments in the Company by any
GS Entity after the date hereof, is being made notwithstanding any engagement,
prior to or subsequent to the date hereof, by the Company, of any GS Entity as
financial advisor, agent or underwriter to the Company. Notwithstanding anything
in this Agreement and the Related Documents to the contrary, no GS Entity shall
be restricted in any way from engaging in any brokerage, investment advisory,
financial advisory, anti-raid advisory, financing, asset management, trading,
market making, arbitrage and other similar activities conducted in the ordinary
course of its business.
7.15. Use of Name. Neither the Company nor any of its affiliates shall
use the names of any GS Entity in any press release, notice or other publication
without the prior written consent of such GS Entity, which such consent shall
not be unreasonably withheld or delayed; provided, however, that such GS Entity
acknowledges and agrees that the Company may issue a press release upon the
Closing of the sale of the Series A Preferred Stock stating the total amount
invested in the Company in a list of participating Investors.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18.
23
[SIGNATURE PAGES TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
"COMPANY"
LOANTRADER, INC., a Delaware corporation
F/K/A DENOVONET, Inc
By:
-----------------------------------------------
▇▇▇▇ ▇. Le, President
Address: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
"INVESTORS"
SPECIALTY FINANCE PARTNERS
By: Capital Z Financial Services II, L.P.,
a general partner
By: Capital Z Partners, Ltd.
Its Ultimate general partner
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: One Market Plaza
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LENDINGTREE, INC., a Delaware corporation
By:
-----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
24
[SIGNATURE PAGES TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT]
THE ▇▇▇▇▇▇▇ ▇▇▇▇▇ GROUP, INC
By:
-----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇.▇.
By:
-----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
BRIDGE STREET SPECIAL OPPORTUNITIES
FUND 2000, L.L.C.
By:
-----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
25
[SIGNATURE PAGES TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT]
--------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
26
[SIGNATURE PAGES TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT]
NEW CENTURY MORTGAGE
CORPORATION, a California corporation
By:
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Name:
----------------------------------------
Title:
---------------------------------------
Address: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
F. & A. Revocable Trust
--------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, TRUSTEE
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ FAMILY TRUST, A
TRUST AGREEMENT DATED
NOVEMBER 10, 1989
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE
Address: ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ # ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇. #▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
27
[SIGNATURE PAGES TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT]
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: c/o Credit Suisse First Boston
Technology Group
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
G. ▇▇▇▇▇ ▇▇▇▇▇
Address: c/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇/▇ ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
28
[SIGNATURE PAGES TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT]
▇▇▇▇▇▇▇▇ FAMILY TRUST
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, TTEE. U/A DTD. 11/29/94
▇▇▇▇▇▇▇▇ FAMILY TRUST
--------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, TTEE. U/A DTD. 11/29/94 ▇▇▇▇▇▇▇▇
FAMILY TRUST
Address: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
By:
-----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, PARTNER
Address: ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
29
[SIGNATURE PAGES TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT]
--------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, AS JOINT TENANTS WITH RIGHT OF
SURVIVORSHIP
--------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, AS JOINT TENANTS WITH RIGHT OF
SURVIVORSHIP
Address: ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: Graduate School of Management
University of California, Irvine
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
30
SCHEDULE A
LIST OF INVESTORS
AND
AMOUNT INVESTED
NUMBER OF SHARES
NUMBER OF SHARES OF SERIES A TOTAL NUMBER OF
SERIES A PREFERRED STOCK SERIES A
PREFERRED STOCK ISSUED UPON PREFERRED STOCK
INVESTORS INVESTMENT ISSUED AMOUNT INVESTED IN CONVERTIBLE NOTES CONVERSION ISSUED
--------- ---------- ------ ------------------------------------ ---------- ------
PRINCIPAL ACCRUED INTEREST
--------- ----------------
SPECIALTY FINANCE
PARTNERS $11,750,000 9,325,397 $250,000 -- 198,413 9,523,810
THE ▇▇▇▇▇▇▇ SACHS
GROUP, INC. $ 2,000,001.78 1,587,303 -- -- -- 1,587,303
STONE STREET
FUND 2000, LLC $ 249,999.12 198,412 198,412
BRIDGE STREET
SPECIAL
OPPORTUNITIES FUND
2000, LLC $ 249,999.12 198,412 198,412
LENDINGTREE, INC. $ 2,500,000 1,984,127 -- -- -- 1,984,127
▇▇▇▇▇▇ ▇▇▇▇ $ 10,000 7,937 7,937
$100,000
($50,000 paid at
▇▇▇▇▇ ▇▇▇▇▇▇▇ -- -- CLOSING IN CASH) $2,027.40 41,292
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -- -- 100,000 2,054.79 80,996
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -- -- 12,000 230.14 9,706
G. ▇▇▇▇▇ ▇▇▇▇▇ -- -- 25,000 506.85 20,244
▇▇▇▇ ▇. ▇▇▇▇▇▇ -- -- 10,000 191.78 8,089
▇▇▇▇▇▇▇▇ FAMILY
TRUST -- -- 100,000 2.027.40 80,974
F. & A. REVOCABLE
TRUST -- -- 25,000 506.35 20,244
▇▇▇▇▇ ▇▇▇▇▇ -- -- 100,000 2,027.40 80,974
NEW CENTURY
MORTGAGE
CORPORATION -- -- 50,000 958.90 40,444
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP -- -- 25,000 479.45 20,222
▇▇▇▇▇ ▇. ▇▇▇▇▇ -- -- 25,000 479.45 20,222
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ -- -- 5,000 95.89 4,044
▇▇▇▇▇▇▇▇ ▇. AND
▇▇▇▇▇▇▇; ▇▇▇▇ -- -- 15,000 287.67 12,133
31
▇▇▇▇▇ ▇. ▇▇▇▇▇ -- -- 25,000 178.08 19,893
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -- -- 10,000 52.05 7,978
TOTAL $17,000,000 13,293,651 $827,000 $12,104.11 665,956 13,967,543
32
SCHEDULE B
SCHEDULE OF EXCEPTIONS
LIST OF OMITTED SCHEDULES*
Schedule 2.1 - Organization, Good Standing and Qualification
Schedule 2.2 - Capitalization and Voting Rights
Schedule 2.3 - Subsidiaries
Schedule 2.4 - Authorization
Schedule 2.5 - Valid Issuance of Preferred and Common Stock
Schedule 2.6 - Government Consents
Schedule 2.7 - Offering
Schedule 2.8 - Litigation
Schedule 2.9 - Proprietary Information Agreements
Schedule 2.10 - Patents and Trademarks
Schedule 2.11 - Compliance with Other Instruments
Schedule 2.12 - Agreements; Action
Schedule 2.13 - Related Party Transactions
Schedule 2.14 - Section 83(b) Election
Schedule 2.15 - Financial Statements
Schedule 2.16 - Changes
Schedule 2.17 - Tax Returns
Schedule 2.18 - Permits
Schedule 2.19 - Environmental and Safety Laws
Schedule 2.20 - Disclosure
Schedule 2.21 - Registration Rights
Schedule 2.22 - Corporate Documents; Minute Books
Schedule 2.23 - Insurance
Schedule 2.24 - Employee Benefit Plans
Schedule 2.25 - Labor Agreements and Actions
Schedule 2.26 - Assumptions or Guaranties of Other Persons
Schedule 2.27 - Title to Property and Assets
Schedule 7.6 - Finder's Fee
--------
*LendingTree, Inc. agrees to supplementally furnish to the Commission upon
request a copy of any of the omitted schedules.
33
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Omitted.
34
EXHIBIT B
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
Omitted.
35
EXHIBIT C
LIST OF STOCKHOLDERS
STOCKHOLDER COMMON
-------------------------------------------------- --------------
▇▇▇▇ ▇. Le 2,880,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,600,000
▇▇▇▇▇▇ ▇. ▇▇▇▇ 1,600,000
▇▇▇▇▇ ▇▇▇▇ 64,646
▇▇▇▇▇ ▇▇▇▇▇ 322,612
▇▇▇▇▇ ▇. Le 128,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 130,612
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,056,668
▇▇▇▇▇ ▇▇▇▇▇▇▇ 211,332
▇▇▇▇▇ ▇▇▇▇▇ 10,000
New Century Mortgage Corporation 1,005,861
▇▇▇▇ ▇▇▇▇ 10,000
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP 284,000
--------------
TOTAL 9,303,731
EXHIBIT D
OPINION OF COUNSEL FOR THE COMPANY
Omitted.
EXHIBIT E
AMENDED AND RESTATED STOCK TRANSFER
AND CO-SALE AGREEMENT
Omitted.
EXHIBIT F
MANAGEMENT ADVISORY AGREEMENT
Omitted.
EXHIBIT G
VOTING AGREEMENT
Omitted.
LendingTree, Inc. agrees to supplementally furnish to the Commission upon
request a copy of any of the omitted exhibits.