EXHIBIT 10.21
SALON INTERNET, INC.
AMENDMENT NUMBER TWO TO
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Amendment Number Two ("Amendment Two") to the Series A Preferred Stock
Purchase Agreement dated December 22, 1995, as amended by Amendment Number One
to Series A Preferred Stock Purchase Agreement dated August 2, 1996 ("Amendment
One"), is entered into as of February 6, 1997, by and among Salon Internet,
Inc. (the "Company"), a California corporation, and Adobe Ventures L.P. and H&Q
Salon Investors, L.P. (the "Purchasers") (the Stock Purchase Agreement and
Amendment One are collectively referred to as the "Stock Purchase Agreement"
hereinafter). Unless specifically designated otherwise, the capitalized terms
herein shall have the same meanings given them in the Stock Purchase Agreement.
RECITALS
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A. The Board of Directors of the Company has determined that it is in the
best interests of the Company to amend the Stock Purchase Agreement to provide
for a third closing and to provide for the sale and issuance of an additional
3,000,000 shares of the Company's Series A Preferred Stock to the Purchasers in
the amounts as set forth on the Schedule of Purchasers attached as Exhibit A-2
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hereto.
B. The Company and the Purchasers wish to amend the Stock Purchase
Agreement to provide for a third closing.
AGREEMENT
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NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto agree to amend certain
provisions of the Stock Purchase Agreement as set forth below:
1. Section 1.1 is amended and restated to read in full as follows:
1.1 Authorization; Filing of Articles of Incorporation. The Company
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has authorized the issuance and sale pursuant to the terms and conditions hereof
of up to 5,000,000 shares of its Series A Preferred Stock, (the "Series A
Shares"), having the rights, preferences and privileges as set forth in the form
of the Amended and Restated Articles of Incorporation of the Company (the
"Articles of Incorporation") attached to the Stock Purchase Agreement as Exhibit
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B, as amended by the amendment to the Articles of Incorporation attached hereto
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as Exhibit B-2.
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2. Section 2.1 is amended and restated to read in full as follows:
2.1 Closing Date. The closing comprising the purchase by the
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Purchasers and sale by the Company of 1,700,000 shares of Series A Shares was
held at the offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on December 22, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇ ▇▇▇▇▇▇▇"). A second
closing comprising the purchase by the Purchasers and the sale by the Company of
a total of an additional 300,000 shares of its Series A Shares was held at the
offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich on August 2, 1996 (the "Second
Closing"). In addition, subject to mutual agreement of the Company and the
Purchasers, there may be a third closing comprising the purchase by the
Purchasers and the sale by the Company of a total of an additional 3,000,000
shares of the Company's Series A Shares (the "Third Closing"). The First
Closing, Second Closing and Third Closing referred to in this Section 2.1 each
shall be hereinafter referred to as the "Closing" and the date of the Closing is
hereinafter referred to as the "Closing Date."
3. A new Section 2.3 is added to the Stock Purchase Agreement to read in
full as follows:
2.2 Third Closing Date. The Third Closing comprising the purchase
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by the Purchasers and sale by the Company of 3,000,000 Series A Shares shall be
held at the offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ and Freidenrich, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on February 6, 1997, or at such other time and place as
the Company and the Purchasers may agree in writing.
4. Section 3.4 of the Stock Purchase Agreement shall be amended and
restated to read as follows:
3.4 Capitalization. The authorized capital stock of the Company is
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10,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock, of
which 5,000,000 have been designated Series A Preferred Stock and 5,000,000 have
been designated Series A-1 Preferred Stock. There are issued and outstanding
750,000 shares of the Company's Common Stock and 2,000,000 shares of Series A
Preferred Stock. The holders of record of the presently issued and outstanding
Common Stock, Preferred Stock and options to purchase Common Stock immediately
prior to the Closing are as set forth on Exhibit E-2. All such issued and
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outstanding shares have been duly authorized and validly issued, are fully paid
and nonassessable, and were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. The holders of any and all
rights, options, warrants or conversion rights to purchase or acquire from the
Company any of its capital stock, along with the number of shares of capital
stock issuable upon exercise of such rights, are set forth in Exhibit E-2
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hereto. The Company has reserved at least 5,000,000 shares of Common Stock for
issuance upon conversion of the Series A Preferred Stock and 3,750,000 shares of
Common Stock for future issuance to employees, consultants, officers or
directors under stock or other option plans or arrangements approved by the
Board of Directors. Except for such rights, there are no outstanding rights,
options, warrants, conversion rights or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. The Company is
not a party or subject to any agreement or understanding between any persons or
entities, which affects or relates to the voting or giving of written
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consents with respect to any securities.
5. Section 3.5(a) of the Stock Purchase Agreement shall be amended and
restated to read in full as follows:
"(a) Corporate Action. All corporate action on the part of the Company,
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its officers, directors and shareholders necessary for the sale and issuance of
the Series A Shares, the issuance of the Common Stock issuable upon conversion
of the Series A Shares and the performance of the Company's obligations
hereunder and under the Rights Agreement has been taken or will be taken prior
to the Closing. The Company has duly reserved an aggregate of 5,000,000 shares
of Common Stock for issuance upon conversion of the Series A Shares."
5. Exhibit B, the Articles of Incorporation, are amended as set forth on
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Exhibit B-2 attached hereto.
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6. Exhibit C, the Schedule of Exceptions, is amended and restated to read
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as set forth on Exhibit C-2 attached hereto.
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7. Exhibit E, the List of Stockholders and Optionholders, is amended and
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restated to read as set forth on Exhibit E-2 attached hereto.
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8. Exhibit F, the List of Material Contracts, is amended and restated to
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read as set forth on Exhibit F-2 attached hereto.
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9. This Amendment Two shall inure to the benefit of the successors and
assigns of the Company and the Purchasers.
10. This Amendment Two shall be construed under the laws of the State of
California as it applies to agreements between California residents, entered
into and to be performed entirely within California.
11. This Amendment Two may be executed in multiple counterparts, each of
which when so executed shall be deemed an original, and all counterparts shall
constitute but one and the same instrument.
12. Except as amended hereby, the Stock Purchase Agreement remains in full
force and effect.
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IN WITNESS WHEREOF, the parties have executed this Amendment Two as of the
day and year first above written.
SALON INTERNET, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, President
ADOBE VENTURES L.P.
By: Its General Partner,
H&Q Adobe Ventures Management L.P.,
By: Its General Partner,
H&Q Adobe Ventures Management Corp.,
By: Its President,
▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
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Title: President
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H&Q SALON INVESTORS, L.P.
By: /s/ ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
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Title: President
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EXHIBIT A - 2
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Schedule of Purchasers
Third Closing
THIRD CLOSING PURCHASER
Name No. of Shares Purchase Price
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Adobe Ventures L.P. 2,250,000 $2,250,000
▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
H&Q Salon Investors, L.P. 750,000 750,000
▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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TOTAL 3,000,000 $3,000,000
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EXHIBIT B-2
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Certificate of Amendment
to
Amended and Restated Certificate of Incorporation
of
Salon Internet, Inc.
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EXHIBIT C-2
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Schedule of Exceptions
Third Closing
Pursuant to Section 3 of the Series A Preferred Stock Purchase Agreement
dated December 22, 1995 (the "Agreement"), as amended in August 1996 and
February 1997, between Salon Internet, Inc. (the "Company") and the purchasers
listed on the Schedule of Purchasers attached to the Agreement as Exhibit A, the
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Company hereby delivers this Schedule of Exceptions (the "Schedule"). The
section numbers in the Schedule correspond to the section numbers in the
Agreement. Any information disclosed under any section in the Schedule is deemed
to be disclosed and incorporated in any other section of the Schedule where such
disclosure would be appropriate. Capitalized terms used in the Schedule, unless
otherwise specified, have the same meanings given them in the Agreement.
3.7 Patents, Trademarks, etc. Pursuant to Letter Agreements between the
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Company and Borders, Inc. dated December 13, 1995 and November 11, 1996
(the "Borders Agreements"), the Company has granted Borders, Inc. an
exclusive license to reproduce, distribute and display certain written
reviews created by the Company during the term of the Borders Agreements.
3.10 Litigation, etc. The Company terminated an employee in late 1996. In
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December 1996, the Company received a letter from this ex-employee
indicating the ex-employee intended to ▇▇▇ the Company for wrongful
termination unless the Company paid the ex-employee $5,000. After
consulting with counsel, the management of the Company concluded that the
ex-employee had no basis for a wrongful termination claim and in January
1997 communicated this to the ex-employee.
3.16 Financial Statements. The Company has delivered to Purchasers the
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unaudited balance sheets and related statements of operations and cash flow
as of November 30, 1996 and for the eleven month period then ended. Such
financial statements shall be the "Financial Statements" for purposes of
Section 3.16 of the Agreement and the Third Closing, and the
representations made as of October 31, 1995 in Section 3.16 of the
Agreement and November 30, 1995 in Section 3.17 of the Agreement shall be
made as of November 30, 1996 for purposes of the Third Closing.
3.18 Outstanding Indebtedness. The Company has indebtedness incurred in the
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ordinary course of business, which in the aggregate does not exceed $25,000
as of January 25, 1997.
3.22 Employee Benefit Plans. The Company's only "employee benefit plan" is the
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Salon Internet, Inc. 401(k) Plan (the "Plan"). The Company makes no
contributions the Plan. The Company's Board of Directors has also approved
the Salon Internet, Inc. 1995 Stock
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Option Plan.
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EXHIBIT E-2
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List of Stockholders and Optionholders
Third Closing
HOLDERS OF OUTSTANDING COMMON STOCK
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Number
of
Name Shares
---- ------
▇▇▇▇▇ ▇▇▇▇▇▇ 600,000
▇▇▇▇▇ ▇▇▇▇▇ 150,000
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TOTAL 750,000
HOLDERS OF OUTSTANDING PREFERRED STOCK
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Number
of
Name Shares
---- ------
Adobe Ventures L.P. 1,500,000
H&Q Salon Investors, L.P. 500,000
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TOTAL 2,000,000
HOLDERS OF OPTIONS TO PURCHASE COMMON STOCK
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Name Shares
---- ------
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇ 520,000
A. S. ▇▇▇▇ 280,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 260,000
▇▇▇▇ ▇▇▇▇▇▇ 240,000
▇▇▇ ▇▇▇▇▇▇▇ 100,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 90,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 100,000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 60,000
▇▇▇▇▇ ▇▇▇▇▇▇ 100,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 50,000
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▇▇▇▇▇▇ ▇▇▇▇▇▇ 50,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 55,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 30,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 15,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 10,000
▇▇▇▇ ▇▇▇▇▇▇▇ 85,000
Karen Templar 20,000
▇▇▇▇ ▇▇▇▇▇▇▇ 10,000
▇▇▇▇▇ ▇▇▇▇▇▇ 15,000
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 20,000
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TOTAL 2,460,000
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EXHIBIT F-2
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List of Material Contracts
1. Letter Agreement between Salon Internet, Inc. and Borders, Inc. dated
December 13, 1995
2. WebGenesis, Inc. Agreement between Salon Internet, Inc. and
WebGenesis, Inc. dated December 7, 1995.
3. Common Stock Purchase Agreement between Salon Internet, Inc. and ▇▇▇▇▇
▇▇▇▇▇ dated July 5, 1995.
4. Common Stock Purchase Agreement between Salon Internet, Inc. and ▇▇▇▇▇
▇▇▇▇▇▇ dated July 5, 1995.
5. Apple Computer, Inc. Agreement for Consulting Services between Apple
Computer, Inc. and Salon Internet, Inc. dated August 3, 1995.
6. Apple Computer, Inc. Agreement for Consulting Services between Apple
Computer, Inc. and Salon Internet, Inc. dated October 13, 1995.
7. Letter Agreement between Salon Internet, Inc. and Borders, Inc. dated
November 11, 1996
8. Employment Letter Agreement with ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇ dated November 1996
(provides for severance payments).
9. Employment Letter Agreement with ▇▇▇ ▇▇▇▇▇▇ dated January 1997
(provides for severance payments)
10. The Company has the following standard agreements with its employees
and consultants: proprietary rights agreements and option agreements.
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