Exhibit 10.1
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SECURITIES PURCHASE AGREEMENT
among
▇▇▇▇▇▇▇.▇▇▇, INC.,
GENERAL ATLANTIC PARTNERS, 74, L.P.,
GAP COINVESTMENT PARTNERS II, L.P.
and
GAPSTAR, LLC
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Dated: March 15, 2002
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Table of Contents
Page
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ARTICLE I DEFINITIONS ............................................... 1
1.1 Definitions ........................................... 1
ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS ........ 8
2.1 Purchase and Sale of Preferred Stock .................. 8
2.2 Certificates of Designations .......................... 8
2.3 Use of Proceeds ....................................... 8
2.4 Deliveries on the Date Hereof by the Company .......... 8
2.5 Deliveries on the Date Hereof by the Purchasers ....... 10
2.6 Closing ............................................... 10
2.7 Notice of Issuance to Stockholders .................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........... 10
3.1 Corporate Existence and Power ......................... 11
3.2 Authorization; No Contravention ....................... 11
3.3 Governmental Authorization; Third Party Consents ...... 11
3.4 Binding Effect ........................................ 12
3.5 Litigation ............................................ 12
3.6 Compliance with Laws .................................. 12
3.7 Capitalization ........................................ 13
3.8 No Default or Breach; Contractual Obligations ......... 14
3.9 SEC Documents; Financial Statements ................... 15
3.10 No Material Adverse Change; Ordinary Course of Business 15
3.11 Taxes ................................................. 16
3.12 Private Offering ...................................... 16
3.13 Employee Benefit Plans ................................ 16
3.14 Change of Control Payments ............................ 17
3.15 Liabilities ........................................... 17
3.16 Intellectual Property ................................. 18
3.17 Privacy of Customer Information ....................... 20
3.18 Environmental Matters ................................. 20
3.19 Broker's, Finder's or Similar Fees .................... 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS ......... 20
4.1 Existence and Power ................................... 20
4.2 Authorization; No Contravention ....................... 20
4.3 Governmental Authorization; Third Party Consents ...... 21
4.4 Binding Effect ........................................ 21
4.5 Purchase for Own Account .............................. 21
4.6 Restricted Securities ................................. 22
4.7 Broker's, Finder's or Similar Fees .................... 22
4.8 Accredited Investor ................................... 22
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ARTICLE V INDEMNIFICATION ........................................... 22
5.1 Indemnification ....................................... 22
5.2 Notification .......................................... 23
5.3 Contribution .......................................... 24
ARTICLE VI AFFIRMATIVE COVENANTS .................................... 24
6.1 Conduct of Business of the Company .................... 24
6.2 No Solicitation ....................................... 25
6.3 Reasonable Efforts .................................... 25
6.4 Reservation of Common Stock ........................... 25
6.5 NASDAQ Listing ........................................ 26
6.6 Insurance ............................................. 26
6.7 Tax Reporting ......................................... 26
6.8 Books and Records ..................................... 26
6.9 Back-ups of Computer Software ......................... 26
6.10 Inspection ............................................ 26
6.11 Board of Directors .................................... 26
ARTICLE VII MISCELLANEOUS ........................................... 27
7.1 Survival of Representations and Warranties ............ 27
7.2 Notices ............................................... 27
7.3 Successors and Assigns; Third Party Beneficiaries ..... 28
7.4 Amendment and Waiver .................................. 28
7.5 Counterparts .......................................... 29
7.6 Headings .............................................. 29
7.7 GOVERNING LAW ......................................... 29
7.8 Severability .......................................... 29
7.9 Rules of Construction ................................. 29
7.10 Entire Agreement ...................................... 29
7.11 Fees .................................................. 29
7.12 Publicity; Confidentiality ............................ 29
7.13 Further Assurances .................................... 30
EXHIBITS
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A Form of Warrant
B Amended and Restated Bylaws
C Form of Certificate of Designations
D Amended and Restated Certificate of Incorporation
E Form of Amended and Restated Registration Rights Agreement
F Form of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP Opinion Delivered on
the date hereof
G Form of ▇▇▇▇▇▇▇ Phleger & ▇▇▇▇▇▇▇▇ LLP Opinion Delivered on
the Closing Date
SCHEDULES
2.1 Purchased Shares, Warrants and Purchase Price
ii
2.4(h) Waivers of Change of Control Contracts
3.1(a) Corporate Existence
3.1(c) Due Qualification
3.2 Execution, Delivery and Performance
3.3 Authorizations and Consents
3.5 Litigation
3.7(a) Options, Warrants, Conversion Privileges, Subscription or
Purchase Rights
3.7(b) List of Subsidiaries and their Equity Holders
3.7(c) NASDAQ Listing Compliance
3.8(a) Contractual Obligations
3.8(b) Change of Control Contracts
3.10(a) Material Adverse Change in Condition of Company
3.10(b) Material Transactions
3.13 Employee Benefit Plans
3.14 Change of Control Payments
3.16(a)(ii) Intellectual Property Orders and Threatened Litigation
3.16(a)(iv) Infringements by the Company of Intellectual Property of Others
3.16(a)(v) Intellectual Property Litigation
3.16(b) Infringements of Intellectual Property of the Company
3.16(d) Licenses or Other Agreements Requiring Material Royalty Payments
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated March 15, 2002 (this
"Agreement"), by and among ▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the
"Company"), General Atlantic Partners 74, L.P., a Delaware limited partnership
("GAP LP"), GAP Coinvestment Partners II, L.P., a Delaware limited partnership
("GAP Coinvestment"), and GapStar, LLC, a Delaware limited liability company
("GapStar" and, collectively with GAP LP and GAP Coinvestment, the
"Purchasers").
WHEREAS, upon the terms and conditions set forth in this Agreement,
the Company proposes to issue and sell to each of the Purchasers (i) the
aggregate number of shares of Series G Senior Cumulative Redeemable Convertible
Participating Preferred Stock, par value $0.000225 per share (the "Preferred
Stock"), of the Company set forth opposite such Purchaser's name on Schedule 2.1
hereto and (ii) a warrant (each a "Warrant" and all of the Warrants so issued,
the "Warrants") to purchase, subject to the terms and conditions thereof, the
aggregate number of shares of Common Stock (subject to adjustment) set forth
opposite such Purchaser's name on Schedule 2.1 hereto, at an exercise price of
$2.36 per share (subject to adjustment), containing the terms and conditions set
forth in the form of warrant attached hereto as Exhibit A, each of (i) and (ii)
together for the aggregate purchase price set forth opposite such Purchaser's
name on Schedule 2.1 hereto; and
WHEREAS, each share of Preferred Stock is convertible (subject to
adjustment) into one share, par value $0.000225 per share, of common stock of
the Company (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean any Person who is an "affiliate" as defined
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, the following shall be deemed to be Affiliates of GAP Coinvestment,
GAP LP and GapStar: (a) GAP LLC, the members of GAP LLC, the limited partners of
GAP Coinvestment, the limited partners of GAP LP and the members of GapStar; (b)
any Affiliate of GAP LLC, the members of GAP LLC, the limited partners of GAP
Coinvestment or GAP LP and the members of GapStar; and (c) any limited liability
company or partnership a majority of whose members or partners, as the case may
be, are members or former members of GAP LLC or consultants or key employees of
General
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Atlantic Service Corporation, a Delaware corporation and an Affiliate of GAP
LLC. In addition, GAP LP, GAP Coinvestment and GapStar shall be deemed to be
Affiliates of one another.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Alternative Proposal" shall mean (a) any offer or proposal, or any
indication of interest in making an offer or proposal, made by any "person" or
"group" (as such terms are used for purposes of Section 13(d)(3) of the Exchange
Act) at any time (i) which is structured to permit such person or group to
acquire beneficial ownership of at least ten percent (10%) of the assets of the
Company and its Subsidiaries taken as a whole, or at least ten percent (10%) of
the outstanding capital stock of the Company pursuant to a merger,
consolidation, tender offer or other business combination, sale or purchase of
capital stock or Stock Equivalents, sale of assets, tender offer or exchange
offer or similar transaction or (ii) which involves the incurrence or assumption
of Indebtedness by the Company or any of its Subsidiaries on a secured or
unsecured basis of at least $5,000,000, including, in the case of clauses (i)
and (ii) above, any single or multi-step transaction or series of related
transactions, in each case other than the transactions with the Purchasers and
(b) any offer or proposal made in the context of a proxy contest with respect to
clause (i) above.
"Audit Committee" has the meaning set forth in Section 5.8 of this
Agreement.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Bylaws" means the Amended and Restated Bylaws of the Company in
effect on the date hereof and the Closing Date and attached hereto as Exhibit B,
as the same may be amended from time to time.
"Certificate of Designations" means the Certificate of Designations
with respect to the Preferred Stock adopted by a special committee of the Board
of Directors and duly filed with the Secretary of State of the State of Delaware
on or before the date hereof substantially in the form attached hereto as
Exhibit C.
"Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of the Company in effect on the date hereof and the
Closing Date and attached hereto as Exhibit D, as the same may be amended from
time to time.
"Change of Control Contracts" has the meaning set forth in Section
3.8(b) of this Agreement.
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"Claims" has the meaning set forth in Section 3.5 of this Agreement.
"Closing" has the meaning set forth in Section 2.6 of this
Agreement.
"Closing Date" has the meaning set forth in Section 2.6 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Commonly Controlled Entity" means any entity which is under common
control with the Company within the meaning of Code section 414(b), (c), (m),
(o) or (t).
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Plans" has the meaning set forth in Section 3.13 of this
Agreement.
"Condition of the Company" means the assets, business, properties,
prospects, operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof.
"Contractual Obligations" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture,
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mortgage, deed of trust or other instrument to which such Person is a party or
by which it or any of its property is bound.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"Environmental Laws" means federal, state, local and foreign laws,
principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issued, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Financial Statements" has the meaning set forth in Section 3.9 of
this Agreement.
"GAAP" means United States generally accepted accounting principles
in effect from time to time.
"GAP Coinvestment" has the meaning set forth in the preamble to this
Agreement.
"GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP and the managing member of
GapStar, and any successor to such entity.
"GAP LP" has the meaning set forth in the preamble to this
Agreement.
"GapStar" has the meaning set forth in the preamble to this
Agreement.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Indebtedness" means, as to any Person, (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such Person to pay
the deferred purchase price of property or services, except trade accounts
payable and accrued commercial or trade liabilities arising in the ordinary
course of business, (c) all interest rate and currency swaps, caps, collars and
similar agreements or hedging devices under which payments are obligated to be
made by such Person, whether periodically or upon the happening of a
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contingency, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, (f) all
indebtedness secured by any Lien (other than Liens in favor of lessors under
leases other than leases included in clause (e)) on any property or asset owned
or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is non-recourse to the credit of that
Person, and (g) any Contingent Obligation of such Person.
"Indemnified Party" has the meaning set forth in Section 5.1 of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 5.1 of
this Agreement.
"Intellectual Property" has the meaning set forth in Section 3.16 of
this Agreement.
"Internet Assets" means any Internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
"Knowledge" means the knowledge of the Company after due inquiry.
"Liabilities" has the meaning set forth in Section 3.15 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).
"Losses" has the meaning set forth in Section 5.1 of this Agreement.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"Note" has the meaning set forth in Section 2.1 of this Agreement.
"Orders" has the meaning set forth in Section 3.2 of this Agreement.
"Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Permits" has the meaning set forth in Section 3.6(b) of this
Agreement.
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"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"Plan" means any employee benefit plan, arrangement, policy,
program, agreement or commitment (whether or not an employee plan within the
meaning of section 3(3) of ERISA), including, without limitation, any
employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accident insurance plan, whether oral or written, whether or not subject to
ERISA, as to which the Company or any Commonly Controlled Entity has or in the
future could have any direct or indirect, actual or contingent liability.
"Preferred Stock" has the meaning set forth in the recitals to this
Agreement.
"Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Purchasers" has the meaning set forth in the preamble to this
Agreement.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement substantially in the form attached hereto as
Exhibit E.
"Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable or binding upon such Person or any of
its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"Retiree Welfare Plan" means any welfare plan (as defined in Section
3(1) of ERISA) that provides benefits to current or former employees beyond
their retirement or other termination of service (other than coverage mandated
by Section 4980A of the Code, commonly referred to as "COBRA," the cost of which
is fully paid by the current or former employee or his or her dependents).
"SEC Documents" has the meaning set forth in Section 3.9 of this
Agreement.
"Securities" means the Purchased Shares and the Warrants.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
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"Series F Certificate of Designations" means the Certificate of
Designations with respect to the Series F Preferred Stock adopted by the Board
of Directors and duly filed with the Secretary of State of the State of Delaware
on June 21, 2001.
"Series F Preferred Stock" means the Series F Senior Cumulative
Redeemable Preferred Stock, par value $0.000225 per share, of the Company.
"Software" means any computer software programs, source code, object
code, data and documentation, including, without limitation, any computer
software programs that incorporate and run the Company's pricing models,
formulae and algorithms.
"Stock Equivalents" means any security or obligation which is by its
terms, whether directly or indirectly, convertible into or exchangeable or
exercisable for shares of Common Stock or other capital stock of the Company,
and any option, warrant or other subscription or purchase right with respect to
Common Stock or such other capital stock.
"Stock Option Plan" means (a) the 1999 Stock Incentive Plan of the
Company and (b) the 2001 Stock Option Plan of the Company, pursuant to which up
to 2,630,817 shares of restricted stock and options to purchase shares of Common
Stock have been reserved and available for grant to officers, directors,
employees and consultants of the Company.
"Subsidiaries" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of the
voting power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person. Unless otherwise qualified, or the context otherwise requires, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
"Taxes" means any federal, state, provincial, county, local, foreign
and other taxes (including, without limitation, income, profits, windfall
profits, alternative, minimum, accumulated earnings, personal holding company,
capital stock, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.
"Trade Secrets" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.
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"Transaction Documents" means, collectively, this Agreement, the
Warrants, the Certificate of Designations and the Registration Rights Agreement.
"Warrant Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Warrants" has the meaning set forth in the recitals to this
Agreement.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS
2.1 Purchase and Sale of Preferred Stock. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, agrees to purchase
from the Company, on the Closing Date, (i) the aggregate number of shares of
Preferred Stock set forth opposite such Purchaser's name on Schedule 2.1 hereto
(all of the shares of Preferred Stock being purchased pursuant hereto being
referred to herein as the "Purchased Shares"), and (ii) a Warrant to purchase
the aggregate number of shares of Common Stock set forth opposite such
Purchaser's name on Schedule 2.1 hereto (all of the shares of Common Stock
issuable upon the exercise of the Warrants being purchased pursuant hereto being
referred to herein as the "Warrant Shares"), together for the aggregate purchase
price set forth opposite such Purchaser's name on Schedule 2.1 hereto.
2.2 Certificates of Designations. The Purchased Shares shall have
the preferences and rights set forth in the Certificate of Designations.
2.3 Use of Proceeds. The Company shall use the proceeds from the
sale of the Securities to the Purchasers (a) first, to repay any indebtedness
owed by the Company to GAP LP or any of its Affiliates and (b) second, to fund
the Company's working capital.
2.4 Deliveries on the Date Hereof by the Company. On the date
hereof, the Company shall deliver to each Purchaser the following:
(a) Secretary's Certificate. The Company shall deliver to the
Purchasers a certificate from the Company, in form and substance satisfactory to
the Purchasers, dated the date hereof and signed by the Secretary or an
Assistant Secretary of the Company, certifying (a) that the Company is in good
standing with the Secretary of State of the State of Delaware, (b) that the
attached copies of the Certificate of Incorporation, the Bylaws and resolutions
of the Board of Directors of the Company approving this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby, are
all true, complete and correct and remain unamended and in full force and effect
and (c) as to the incumbency and specimen signature of each officer of the
Company executing this Agreement, the Warrants, the other Transaction Documents
and any other document delivered in connection herewith on behalf of the
Company.
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(b) Filing of Certificate of Designations. The Company shall
deliver to the Purchasers written evidence, in form and substance reasonably
satisfactory to the Purchasers, of the filing of the Certificate of Designations
with the Secretary of State of the State of Delaware in accordance with the
General Corporation Law of the State of Delaware.
(c) Registration Rights Agreement. The Company and each of the
Major Stockholders (as defined in the Registration Rights Agreement) shall
deliver to the Purchasers the executed Registration Rights Agreement.
(d) Opinion of Counsel. The Company shall deliver to the
Purchasers an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, dated the date hereof,
relating to the transactions contemplated by or referred to herein,
substantially in the form attached hereto as Exhibit F.
(e) Nasdaq Waiver. The Company shall deliver to the Purchasers
a written exemption from NASDAQ, in form and substance reasonably satisfactory
to the Purchasers, from the stockholder approval requirement of Nasdaq
Marketplace Rule 4350, in connection with the sale and issuance of the shares of
Preferred Stock, the Conversion Shares issuable upon conversion of the shares of
Preferred Stock, the Warrants and the Warrant Shares, and the Company shall have
complied with any conditions contained in such exemption in order to consummate
the transactions contemplated hereby at the Closing. The Company shall have
taken all reasonable steps necessary to ensure that the Conversion Shares
issuable upon conversion of the Purchased Notes and exercise of the Warrants
will have been accepted for listing on NASDAQ pending official notice of
issuance.
(f) Good Standing Certificates. The Company shall deliver to
the Purchasers a good standing certificates for the Company and each of its
Subsidiaries for each of their respective jurisdictions of incorporation.
(g) Board of Directors. The Company shall deliver to the
Purchasers written evidence, in form and substance satisfactory to the
Purchasers, that the Bylaws have been amended to, among other things, increase
the size of the Board of Directors to nine (9) members.
(h) Waiver of Change of Control Provisions. The Company shall
deliver to the Purchasers written amendments or written waivers, in form and
substance satisfactory to the Purchasers, from the parties to the Change of
Control Contracts specified on Schedule 2.4(h), amending or waiving the effect
of the consummation of the transactions contemplated by this Agreement
(including the sale and issuance of the shares of Preferred Stock, the
Conversion Shares issuable upon conversion of the shares of Preferred Stock, the
Warrants and the Warrant Shares).
2.5 Deliveries on the Date Hereof by the Purchasers. On the date
hereof, each Purchaser shall deliver to the Company the executed Registration
Rights Agreement.
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2.6 Closing. The closing of the sale and purchase of the Securities
(the "Closing") shall take place at the offices of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00
a.m., local time on March 25, 2002 (the "Closing Date"). On the Closing Date,
the Company shall deliver to each Purchaser (a)(i) a certificate or certificates
in definitive form and registered in the name of such Purchaser, representing
its Purchased Shares and (ii) its Warrant, against delivery by each of the
Purchasers to the Company of the aggregate purchase price therefor by wire
transfer of immediately available funds and (b)(i) certificate from the Company,
in form and substance satisfactory to the Purchasers, dated the Closing Date and
signed by a senior executive officer, certifying that (x) the representations
and warranties of the Company contained in Article 3 hereof are true and correct
in all material respects at and on the Closing Date (except for such
representations and warranties containing materiality or material adverse effect
qualifications, which shall be true and correct in all respects) and (y) the
Company has performed and complied in all material respects with all of the
agreements and conditions set forth or contemplated herein that are required to
be performed or complied with by the Company on or before the Closing Date; (ii)
its executed Warrant, substantially in the form attached hereto as Exhibit A,
and registered in the name of such Purchaser; and (iii) the opinion of ▇▇▇▇▇▇▇,
Phleger & ▇▇▇▇▇▇▇▇ LLP, dated the Closing Date, relating to the transactions
contemplated by or referred to herein, substantially in the form attached hereto
as Exhibit G.
2.7 Notice of Issuance to Stockholders. On the date hereof, the
Company shall mail to each of its stockholders a notice, in form and substance
reasonably satisfactory to the Purchasers, notifying them of the omission by the
Company to seek the stockholder approval that, absent the exemption provided for
by Nasdaq Marketplace Rule 4350(i)(2), would have been required pursuant to
Nasdaq Marketplace Rule 4350 and indicating that the audit committee of the
Company has expressly approved such omission to seek such stockholder approval.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers as
follows:
3.1 Corporate Existence and Power. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and, except
as set forth on Schedule 3.1(a), in good standing under the laws of the
jurisdiction of its incorporation, (b) has all requisite power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is proposed to be, engaged,
(c) is duly qualified as a foreign corporation, licensed and, except as set
forth on Schedule 3.1(c), in good standing under the laws of each jurisdiction
in which its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a material adverse effect on
the Condition of the
11
Company and (d) has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents. No jurisdiction, other than those referred to in clause (c) above,
has claimed, in writing or otherwise, that either the Company or any of its
Subsidiaries is required to qualify as a foreign corporation or other entity
therein, and neither the Company nor any of its Subsidiaries files any
franchise, income or other tax returns in any other jurisdiction based upon the
ownership or use of property therein or the derivation of income therefrom.
Neither the Company nor any of its Subsidiaries owns or leases property in any
jurisdiction other than its jurisdiction of incorporation and the jurisdictions
referred to in clause (c) above.
3.2 Authorization; No Contravention. Except as set forth on Schedule
3.2, the execution, delivery and performance by the Company of this Agreement
and each of the other Transaction Documents and the transactions contemplated
hereby and thereby (a) have been duly authorized by all necessary corporate
action of the Company, (b) do not contravene the terms of the Certificate of
Incorporation or the Bylaws or the certificate of incorporation, bylaws or other
organizational documents of any of its Subsidiaries, (c) do not violate,
conflict with or result in any breach, default or contravention of (or with due
notice or lapse of time or both would result in any breach, default or
contravention of), or the creation of any Lien under, any Contractual Obligation
of the Company or its Subsidiaries or any Requirement of Law applicable to the
Company or its Subsidiaries and (d) do not violate any judgment, injunction,
writ, award, decree or order of any nature (collectively, "Orders") of any
Governmental Authority against, or binding upon, the Company or its
Subsidiaries. The approval of the transactions contemplated by this Agreement,
the conversion of the shares of Preferred Stock into shares of Common Stock in
accordance with the terms of the Certificate of Designations and the exercise of
the Warrants for the Warrant Shares do not require the approval of the Company's
stockholders under any Requirement of Law, including, without limitation, the
rules and regulations of the NASDAQ.
3.3 Governmental Authorization; Third Party Consents. Except as set
forth in Schedule 3.3, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the sale, issuance and
delivery of the Purchased Shares) by, or enforcement against, the Company of
this Agreement and the other Transaction Documents or the transactions
contemplated hereby and thereby.
3.4 Binding Effect. This Agreement, the Certificate of Designations
and the Registration Rights Agreement have been, and as of the Closing Date the
Warrants will have been, duly executed and delivered by the Company, and this
Agreement, the Certificate of Designations and the Registration Rights Agreement
constitute, and as of the Closing Date the Warrants will constitute, the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy,
12
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
3.5 Litigation. Except as set forth on Schedule 3.5 or as disclosed
in the SEC Documents, there are no actions, suits, proceedings, claims,
complaints, disputes, arbitrations or investigations (collectively, "Claims")
pending or, to the Knowledge of the Company, threatened, at law, in equity, in
arbitration or before any Governmental Authority against the Company or its
Subsidiaries nor is the Company aware that there is any basis for any of the
foregoing. The foregoing includes, without limitation, Claims pending or, to the
Knowledge of the Company, threatened or any basis therefor known by the Company
involving the prior employment of any of the employees of the Company or its
Subsidiaries, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former employers
or their obligations under any agreements with prior employers. No Order has
been issued by any court or other Governmental Authority against the Company
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any of the other Transaction Documents.
3.6 Compliance with Laws.
(a) The Company and its Subsidiaries are in compliance in all
material respects with all Requirements of Law and all Orders issued by any
court or Governmental Authority against the Company and such Subsidiaries in all
respects. To the Company's Knowledge, there is no existing or proposed
Requirement of Law which could reasonably be expected to prohibit or restrict
the Company or its Subsidiaries from, or otherwise materially adversely effect
the Company or its Subsidiaries in, conducting their businesses in any
jurisdiction in which they now conduct or propose to conduct such businesses.
(b) (i) The Company and its Subsidiaries have all material
licenses, permits and approvals of any Governmental Authority (collectively,
"Permits") that are necessary for the conduct of the business of the Company and
its Subsidiaries; (ii) such Permits are in full force and effect; and (iii) no
violations are or have been recorded in respect of any Permit.
(c) No material expenditure is presently required by the
Company or its Subsidiaries to comply with any existing Requirement of Law or
Order.
3.7 Capitalization.
(a) On the date hereof and on the Closing Date, after giving
effect to the transactions contemplated by this Agreement, the authorized
capital stock of the Company shall consist of (i) 225,000,000 shares of Common
Stock, (ii) 28,333,333 shares of Series F Preferred Stock, (iii) 8,474,576
shares of Preferred Stock and (iv) 8,192,091 shares of undesignated "blank
check" preferred
13
stock. As of the close of business on March 13, 2002, 7,444,705 shares of Common
Stock were issued and outstanding and 28,333,333 shares of Series F Preferred
Stock were issued and outstanding. On the date hereof and on the Closing Date,
after giving effect to the transactions contemplated by this Agreement, one
share of Series F Preferred Stock shall be convertible into the sum of (x)
0.2542 shares of Common Stock (subject to adjustment) plus (y) a number of
shares of Common Stock equal to a fraction (I) the numerator of which is the
amount of dividends accrued but not yet paid on such share of Series F Preferred
Stock and (II) the denominator of which is the Conversion Price (as defined in
the Series F Certificate of Designations). As of the date of this Agreement, the
aggregate number of shares underlying options to purchase shares of Common Stock
which may be issued under the Stock Option Plan is 2,630,817, of which 824,165
are available for future grant. The Company has reserved an aggregate of
40,000,000 shares of Common Stock for issuance upon conversion of the Purchased
Shares and 1,800,000 shares of Common Stock for issuance upon exercise of the
Warrants. Except as set forth on Schedule 3.7(a) or as disclosed in the SEC
Documents and except for the Warrants, there are no options, warrants,
conversion privileges, subscription or purchase rights or other rights presently
outstanding to purchase or otherwise acquire (i) any authorized but unissued,
unauthorized or treasury shares of the Company's capital stock, (ii) any Stock
Equivalents or (iii) any other securities of the Company and there are no
commitments, contracts, agreements, arrangements or understandings by the
Company to issue any shares of the Company's capital stock or any Stock
Equivalents or other securities of the Company. The Securities are duly
authorized, and when issued and sold to the Purchasers after payment therefor,
will be validly issued, fully paid and non-assessable, will be issued in
compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws and will be free and clear
of all other Liens. The shares of Common Stock issuable upon conversion of the
Purchased Shares and exercise of the Warrants, when issued in compliance with
the provisions of the Certificate of Designations and the Warrants (in the case
of the Warrant Shares), will be validly issued, fully paid and non-assessable
and not subject to any preemptive rights or similar rights that have not been
satisfied and will be free and clear of all other Liens. All of the issued and
outstanding shares of Common Stock and Preferred Stock are all duly authorized,
validly issued, fully paid and non-assessable, and were issued in compliance
with the registration and qualification requirements of all applicable federal,
state and foreign securities laws.
(b) Schedule 3.7(b) sets forth, as of the date hereof and the
Closing Date, a true and complete list of (x) each of the Subsidiaries of the
Company, (y) the percentage of the authorized shares of capital stock of such
Subsidiary owned by the Company and (z) the stockholders of such Subsidiary and,
opposite the name of each stockholder, the amount of all outstanding capital
stock and Stock Equivalents owned by such stockholder. The Company owns all of
the issued and outstanding capital stock of the Subsidiaries, free and clear of
all Liens. All of such shares of capital stock are duly authorized, validly
issued, fully paid and non-assessable, and were issued in compliance with the
registration and qualification requirements of all applicable federal, state and
foreign securities laws. Except as set forth on Schedule 3.7(b), there are no
options, warrants, conversion privileges, subscription or purchase rights or
other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued, unauthorized or treasury shares of capital stock or
other securities of, or any proprietary interest in, any of the Subsidiaries,
and there is no outstanding security of any kind convertible into or
exchangeable for such shares or proprietary interest. Except as set forth on
14
Schedule 3.7(b), neither the Company nor any of its Subsidiaries, owns any
interest, or has a right to acquire any interest, in any Person that is not a
Subsidiary.
(c) The Common Stock is currently listed for trading on the
NASDAQ and (i) except as set forth on Schedule 3.7(c), the Company and the
Common Stock meet the currently applicable criteria for continued listing and
trading on NASDAQ, (ii) no suspension of trading in the Common Stock is in
effect and (iii) the Company has delivered to NASDAQ all required notices.
3.8 No Default or Breach; Contractual Obligations.
(a) Neither the Company nor any of its Subsidiaries have
received notice of a default nor is in default under, or with respect to, any
material Contractual Obligation nor does any condition exist that with notice or
lapse of time or both would constitute a default thereunder. Except as described
in the SEC Documents or as set forth on Schedule 3.8(a), neither the Company nor
any of its Subsidiaries is a party to any Contractual Obligations, whether
written or oral, (i) which involve an amount in excess of $100,000 or (ii) which
are otherwise material to the Condition of the Company. All of such Contractual
Obligations are valid, subsisting, in full force and effect and binding upon the
Company and its Subsidiaries, as the case may be, and, to the Knowledge of the
Company, the other parties thereto, and the Company and its Subsidiaries have
paid in full or accrued all amounts due thereunder and have satisfied in full or
provided for all of their liabilities and obligations thereunder. To the
Knowledge of the Company, no other party to any such Contractual Obligation is
in default thereunder, nor does any condition exist that with notice or lapse of
time or both would constitute a default by such other party thereunder.
(b) Schedule 3.8(b) sets forth all Contractual Obligations to
which the Company or any of its Subsidiaries are a party or to which their
respective assets or properties are bound that contain a "change of control" or
similar provision pursuant to which (i) payment or other obligations of the
Company are accelerated or arise, (ii) termination rights arise or (iii) notice
is required to be delivered, in each case upon the occurrence of a "change of
control," upon the sale of the Purchased Shares, upon the conversion of the
Purchased Shares into shares of Common Stock upon the issuance of the Warrants
or the exercise of the Warrants for the Warrant Shares (the "Change of Control
Contracts"). The Company has delivered to GAP LP true and complete copies of the
Change of Control Contracts. Except as set forth on Schedule 3.8(b), no "change
of control" or similar provision in any such Change of Control Contract shall be
triggered by the consummation of the transactions contemplated by this
Agreement, the conversion of the Purchased Shares into shares of Common Stock,
the exercise of the Warrants for the Warrant Shares or any of the other
Transaction Documents.
3.9 SEC Documents; Financial Statements. Since November 3, 1999, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits
15
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
Commission, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company (the "Financial Statements") included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto. The
Financial Statements have been prepared in accordance with GAAP, consistently
applied, during the periods involved (except in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Purchasers which is
not included in the SEC Documents contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading.
3.10 No Material Adverse Change; Ordinary Course of Business. Since
December 31, 2000, (a) except as set forth in Schedule 3.10(a), there has not
been any material adverse change, nor is any such change reasonably expected, in
the Condition of the Company, (b) except as set forth on Schedule 3.10(b), the
Company and its Subsidiaries have not participated in any transaction material
to the Condition of the Company or otherwise acted outside the ordinary course
of business, including, without limitation, declaring or paying any dividend or
declaring or making any distribution to its stockholders except out of the
earnings of the Company and or its Subsidiaries, as the case may be, (c) the
Company and its Subsidiaries have not increased the compensation of any of its
officers or the rate of pay of any of its employees, except as part of regular
compensation increases in the ordinary course of business, (d) the Company and
its Subsidiaries have not created or assumed any Lien on a material asset of the
Company and such Subsidiaries, (e) the Company and its Subsidiaries have not
entered into any Contractual Obligation, other than in the ordinary course of
business and (f) there has not occurred a material change in the accounting
principles or practice of the Company or any of its Subsidiaries except as
required by reason of a change in GAAP.
3.11 Taxes. (a) The Company and its Subsidiaries have paid all Taxes
which have come due and are required to be paid by them through the date hereof,
and all deficiencies or other additions to Tax, interest and penalties owed by
them in connection with any such Taxes, other than Taxes being disputed by the
Company or its Subsidiaries in good faith for which adequate reserves have been
made in accordance with GAAP; (b) the Company and its Subsidiaries have timely
filed or caused to be filed all returns for Taxes that they are required to file
on and through the date hereof (including all applicable extensions), and all
such Tax returns are accurate and complete; (c) with
16
respect to all Tax returns of the Company and its Subsidiaries, (i) there is no
unassessed Tax deficiency proposed or, to the Knowledge of the Company,
threatened against the Company or its Subsidiaries and (ii) no audit is in
progress with respect to any return for Taxes, no extension of time is in force
with respect to any date on which any return for Taxes was or is to be filed and
no waiver or agreement is in force for the extension of time for the assessment
or payment of any Tax; (d) all provisions for Tax liabilities of the Company and
its Subsidiaries with respect to the Financial Statements have been made in
accordance with GAAP, consistently applied, and all liabilities for Taxes of the
Company and its Subsidiaries attributable to periods prior to or ending on the
date hereof and the Closing Date have been adequately provided for on the
Financial Statements; and (e) there are no Liens for Taxes on the assets of the
Company and its Subsidiaries.
3.12 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer, sale or issuance of the Purchased Shares or the Warrants. No
registration of the Purchased Shares, pursuant to the provisions of the
Securities Act or any state securities or "blue sky" laws, will be required by
the offer, sale or issuance of the Purchased Shares. The Company agrees that
neither it, nor anyone acting on its behalf, shall offer to sell the Purchased
Shares or any other securities of the Company so as to require the registration
of the Purchased Shares pursuant to the provisions of the Securities Act or any
state securities or "blue sky" laws, unless such Purchased Shares or other
securities are so registered.
3.13 Employee Benefit Plans.
(a) Schedule 3.13 hereto and the SEC Documents together list
each Plan that the Company or any of its Subsidiaries maintain or to which the
Company or any of its Subsidiaries contribute (the "Company Plans"). The Company
and its Subsidiaries have no liability under any Plans other than the Company
Plans. Except as set forth on Schedule 3.13, neither the Company nor its
Subsidiaries nor any Commonly Controlled Entity maintains or contributes to, or
has within the preceding six years maintained or contributed to, or may have any
liability with respect to any Plan subject to Title IV of ERISA or Section 412
of the Code or any "multiple employer plan" within the meaning of the Code or
ERISA. Each Company Plan (and related trust, insurance contract or fund) has
been established and administered in accordance with its terms, and complies in
form and in operation with the applicable requirements of ERISA and the Code and
other applicable Requirements of Law. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each Company Plan.
(b) No Claim with respect to the administration or the
investment of the assets of any Company Plan (other than routine claims for
benefits) is pending.
(c) Each Company Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period
17
since its adoption; each trust created under any such Plan is exempt from tax
under Section 501(a) of the Code and has been so exempt since its creation.
(d) No Company Plan is a Retiree Welfare Plan.
(e) There are no unfunded obligations under any Company Plan
which are not fully reflected on the Financial Statements.
(f) The Company has no liability, whether absolute or
contingent, including any obligations under any Company Plan, with respect to
any misclassification of any person as an independent contractor rather than as
an employee.
3.14 Change of Control Payments. Neither the execution and delivery
of this Agreement nor the transactions contemplated hereby will, except as set
forth on Schedule 3.14, (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to, accelerate the time of payment or vesting of or
increase the amount of compensation due to any director, officer, employee,
former employee, consultant or former consultant of the Company or any of its
Subsidiaries, under any Company Plan or otherwise, (ii) increase any benefits
otherwise payable under any Company Plan, (iii) result in the acceleration of
the time of payment or vesting of any such benefits, (iv) create a right to
receive payments upon a subsequent termination of employment or (v) result in
the acceleration of the time of payment of any of the Company's or any of its
Subsidiary's accounts payable.
3.15 Liabilities. The Company and its Subsidiaries do not have any
direct or indirect obligation or liability (the "Liabilities") other than (a)
Liabilities fully and adequately reflected in or reserved against on the
Financial Statements and (b) Liabilities incurred since December 31, 2000 in the
ordinary course of business. The Company has no Knowledge of any circumstance,
condition, event or arrangement that could reasonably be expected to give rise
hereafter to any Liabilities of the Company or its Subsidiaries except in the
ordinary course of business.
3.16 Intellectual Property.
(a) (i) The Company and its Subsidiaries are the owners of
all, or have the license or right to use, sell and license all of, the
Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets, Software and
other proprietary rights (collectively, "Intellectual Property") that are used
in connection with their businesses as presently conducted or contemplated in
the business plan of the Company and its Subsidiaries, free and clear of all
Liens.
(ii) Other than as set forth on Schedule 3.16 (a)(ii),
none of the Intellectual Property is subject to any outstanding Order, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand is pending or, to the Knowledge of the Company, threatened, which
challenges the validity, enforceability, use or ownership of the item.
18
(iii) With regard to all Intellectual Property licenses,
sublicenses, distributor agreements and other agreements under which the Company
or its Subsidiaries are either a licensor, licensee or distributor, except such
licenses, sublicenses and other agreements relating to off-the-shelf software,
which is commercially available on a retail basis and used solely on the
computers of the Company or its Subsidiaries, the Company and its Subsidiaries
have substantially performed all obligations imposed upon them thereunder, and
are not, nor to the Knowledge of the Company is any other party thereto, in
breach of or default thereunder in any respect, nor is there any event which
with notice or lapse of time or both would constitute a default thereunder. All
of the Intellectual Property licenses are valid, enforceable and in full force
and effect, and will continue to be so on identical terms immediately following
the Closing, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(iv) Other than as set forth on Schedule 3.16(a)(iv),
none of the Intellectual Property currently sold or licensed by the Company or
its Subsidiaries to any Person or used by or licensed to the Company or its
Subsidiaries by any Person infringes upon or otherwise violates any Intellectual
Property rights of others.
(v) Except as set forth on Schedule 3.16(a)(v), no
litigation is pending and no Claim has been made against the Company or its
Subsidiaries or, to the Knowledge of the Company, is threatened, contesting the
right of the Company or its Subsidiaries to sell or license to any Person or use
the Intellectual Property presently sold or licensed to such Person or used by
the Company or its Subsidiaries.
(b) Except as set forth on Schedule 3.16(b), to the Knowledge
of the Company, no Person is infringing upon or otherwise violating the
Intellectual Property rights of the Company and its Subsidiaries.
(c) No former employer of any employee of the Company or its
Subsidiaries, and no current or former client of any consultant of the Company
or its Subsidiaries, has made a claim against the Company, its Subsidiaries, or
any Affiliates thereof or, to the Knowledge of the Company, against any other
Person, that such employee or such consultant is utilizing Intellectual Property
of such former employer or client.
(d) Except as set forth on Schedule 3.16(d) or disclosed in
the SEC Documents, neither the Company nor any of its Subsidiaries are parties
to or bound by any license or other agreement requiring the payment by the
Company or such Subsidiaries of any royalty payment, excluding such agreements
relating to software licensed for use solely on the computers of the Company or
such Subsidiaries.
(e) To the Knowledge of the Company, no employee of the
Company or its Subsidiaries is in violation of any Requirement of Law applicable
to such employee, or any term of any employment agreement, patent or invention
disclosure
19
agreement or other contract or agreement relating to the relationship of such
employee with the Company or its Subsidiaries or any prior employer.
(f) To the Knowledge of the Company, none of the Trade Secrets
of the Company or its Subsidiaries, wherever located, the value of which is
contingent upon maintenance of confidentiality thereof, has been disclosed to
any Person other than employees, representatives and agents of the Company or
its Subsidiaries, except as required pursuant to the filing of a patent
application by the Company or its Subsidiaries.
(g) It is not necessary for the business of the Company and
its Subsidiaries to use any Intellectual Property owned by any director,
officer, employee or consultant of the Company or its Subsidiaries (or Persons
the Company or any of its Subsidiaries presently intend to hire). To the
Company's Knowledge, at no time during the conception or reduction to practice
of any of the Company's or its Subsidiaries' Intellectual Property was any
developer, inventor or other contributor to such Intellectual Property operating
under any grants from any Governmental Authority or subject to any employment
agreement, invention assignment, nondisclosure agreement or other Contractual
Obligation with any Person that could adversely affect the Company's or such
Subsidiaries' rights to their Intellectual Property.
(h) All present employees of the Company and its Subsidiaries
have executed and delivered proprietary invention agreements with the Company or
such Subsidiaries, as the case may be, and are obligated under the terms thereof
to assign all inventions made by them during the course of employment to the
Company or its Subsidiaries. No such employee or present consultant of the
Company or its Subsidiaries has excluded works or inventions made prior to his
employment with or work for the Company or its Subsidiaries from his assignment
of inventions pursuant to such proprietary invention agreements.
3.17 Privacy of Customer Information. Neither the Company nor its
Subsidiaries uses any of the customer information it receives through its
websites or otherwise in an unlawful manner, or in a manner violative of the
Company's or such Subsidiaries' privacy policy or the privacy rights of its
customers. The Company and its Subsidiaries have not collected any customer
information through their websites in an unlawful manner or in violation of its
privacy policy. The Company and its Subsidiaries have adequate security measures
in place to protect the customer information they receive through their websites
and which they store in their computer systems from illegal use by third parties
or use by third parties in a manner violative of the rights of privacy of their
customers. The Company and its Subsidiaries represent to their customers that
they assure complete security as to the customer information they receive
through their websites.
3.18 Environmental Matters. The Company and its Subsidiaries are in
compliance with all applicable Environmental Laws. There is no civil, criminal
or administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to the
Knowledge of the
20
Company, threatened against the Company or its Subsidiaries pursuant to
Environmental Laws. To the Knowledge of the Company, there are no past or
present events, conditions, circumstances, activities, practices, incidents,
agreements, actions or plans which could reasonably be expected to prevent
compliance with, or which have given rise to or will give rise to liability
which would have a material adverse effect on the Condition of the Company,
under Environmental Laws.
3.19 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
or any of its Subsidiaries in connection with the transactions contemplated
hereby based on any agreement, arrangement or understanding with the Company or
any of its Subsidiaries or any action taken by any such Person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers hereby represents and warrants, severally and
not jointly, to the Company as follows:
4.1 Existence and Power. Such Purchaser (a) is a limited partnership
or limited liability company, as the case may be, duly organized and validly
existing under the laws of the jurisdiction of its formation and (b) has the
requisite partnership or limited liability company, as the case may be, power
and authority to execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, (a) have been duly authorized by all necessary partnership
or limited liability company, as the case may be, action, (b) do not contravene
the terms of such Purchaser's organizational documents, or any amendment
thereof, (c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under, any Contractual Obligation
of such Purchaser or any Requirement of Law applicable to such Purchaser (except
for the Lien created on the Purchased Shares purchased by GapStar to secure its
obligations under a bona fide loan made to acquire such Purchased Shares), and
(d) do not violate any Orders of any Governmental Authority against, or binding
upon, such Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Purchased Shares) by, or enforcement against,
such Purchaser of this Agreement and the other Transaction Documents or the
transactions contemplated hereby and thereby.
21
4.4 Binding Effect. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by such Purchaser, and
constitute the legal, valid and binding obligations of such Purchaser,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).
4.5 Purchase for Own Account. The Securities to be acquired by such
Purchaser pursuant to this Agreement are being or will be acquired for its own
account and with no intention of distributing or reselling such Purchased Shares
or Warrants or any part thereof in any transaction that would be in violation of
the securities laws of the United States, any state of the United States or any
foreign jurisdiction, without prejudice, however, to the rights of such
Purchaser at all times to sell or otherwise dispose of all or any part of such
Purchased Shares or Warrants under an effective registration statement under the
Securities Act, or under an exemption from such registration available under the
Securities Act, and subject, nevertheless, to the disposition of such
Purchaser's property being at all times within its control. If such Purchaser
should in the future decide to dispose of any of such Purchased Shares, such
Purchaser understands and agrees that it may do so only in compliance with the
Securities Act and applicable state and foreign securities laws, as then in
effect. Such Purchaser agrees to the imprinting, so long as required by law, of
a legend on certificates representing all of its Purchased Shares and shares of
Common Stock issuable upon conversion of its Purchased Shares and exercise of
its Warrants to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION.
THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
4.6 Restricted Securities. Such Purchaser understands that the
Purchased Shares will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4(2) of the Securities Act and that the reliance of
the Company on such exemption is predicated in part on such Purchaser's
representations set forth herein.
4.7 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by such
Purchaser in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with such Purchaser or any action taken
by such Purchaser.
22
4.8 Accredited Investor. Such Purchaser is an "Accredited Investor"
within the meaning of Rule 501 of Regulation D under the Securities Act, as
presently in effect.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification. Except as otherwise provided in this Article V,
the Company (the "Indemnifying Party") agrees to indemnify, defend and hold
harmless each of the Purchasers and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "Indemnified Party") to the fullest extent
permitted by law from and against any and all losses, Claims, or written threats
thereof (including, without limitation, any Claim by a third party), damages,
expenses (including reasonable fees, disbursements and other charges of counsel
reasonably incurred by the Indemnified Party in any action between the
Indemnifying Party and the Indemnified Party or between the Indemnified Party
and any third party or otherwise) or other liabilities (collectively, "Losses")
resulting from or arising out of any breach of any representation or warranty,
covenant or agreement by the Company in this Agreement or the Registration
Rights Agreement. The amount of any payment to any Indemnified Party herewith in
respect of any Loss shall be of sufficient amount to make such Indemnified Party
whole for any diminution in value of the Purchased Shares. In connection with
the obligation of the Indemnifying Party to indemnify for expenses as set forth
above, the Indemnifying Party shall, upon presentation of appropriate invoices
containing reasonable detail, reimburse each Indemnified Party for all such
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party)
as they are incurred by such Indemnified Party; provided, however, that if an
Indemnified Party is reimbursed under this Article V for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party.
5.2 Notification. Each Indemnified Party under this Article V shall,
promptly after the receipt of notice of the commencement of any Claim against
such Indemnified Party in respect of which indemnity may be sought from the
Indemnifying Party under this Article V, notify the Indemnifying Party in
writing of the commencement thereof. The omission of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Article V or (b) under this Article V
unless, and only to the extent that, such omission results in the Indemnifying
Party's forfeiture of substantive rights or defenses. In case any such Claim
shall be brought against any Indemnified Party, and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any
23
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense at its own expense. Notwithstanding the foregoing,
in any Claim in which both the Indemnifying Party, on the one hand, and an
Indemnified Party, on the other hand, are, or are reasonably likely to become, a
party, such Indemnified Party shall have the right to employ separate counsel
and to control its own defense of such Claim if, in the reasonable opinion of
counsel to such Indemnified Party, either (x) one or more defenses are available
to the Indemnified Party that are not available to the Indemnifying Party or (y)
a conflict or potential conflict exists between the Indemnifying Party, on the
one hand, and such Indemnified Party, on the other hand, that would make such
separate representation advisable; provided, however, that the Indemnifying
Party (i) shall not be liable for the fees and expenses of more than one counsel
to all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for
all of such fees and expenses of such counsel incurred in any action between the
Indemnifying Party and the Indemnified Parties or between the Indemnified
Parties and any third party, as such expenses are incurred. The Indemnifying
Party agrees that it will not, without the prior written consent of the
Purchasers, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising or
that may arise out of such Claim. The Indemnifying Party shall not be liable for
any settlement of any Claim effected against an Indemnified Party without its
written consent, which consent shall not be unreasonably withheld. The rights
accorded to an Indemnified Party hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate agreement or
otherwise; provided, however, that notwithstanding the foregoing or anything to
the contrary contained in this Agreement, nothing in this Article V shall
restrict or limit any rights that any Indemnified Party may have to seek
equitable relief.
5.3 Contribution. If the indemnification provided for in this
Article V from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Losses referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative faults of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Sections 5.1 and 5.2, any legal or other fees,
charges or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
24
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers as
follows:
6.1 Conduct of Business of the Company. Except as contemplated by
this Agreement or with the prior written consent of the Purchasers, during the
period from the date of this Agreement to the Closing Date, the Company will
conduct its operations only in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort then would be applied in the absence of this Agreement, will use its
reasonable best efforts to preserve intact the business organization of the
Company, to keep available the services of the present officers and key
employees of the Company and to preserve the good will of customers, suppliers
and all other Persons having business relationships with the Company. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement, prior to the Closing Date, the Company will not, without the
prior written consent of the Purchasers, which consent will not be unreasonably
withheld or delayed: (a) engage in any transaction (including, without
limitation, capital expenditures) out of the ordinary course of its business and
consistent with past practices; (b) issue, reissue or sell, or authorize the
issuance, reissuance or sale of shares of capital stock of any class, or
securities convertible into capital stock of any class, or any rights, warrants
or options to acquire any convertible securities or capital stock; (c) dispose
of any of its assets or properties except to the extent these are used, retired
or replaced in the ordinary course of its business; (d) fail to keep in force
any governmental licenses, permits, authorizations, consents or approvals
required by the Company to own its assets and properties or to carry on its
business as currently conducted; (e) fail to keep in force its Intellectual
Property rights; (f) fail to perform all material obligations required to be
performed by it under any of the Contractual Obligations; (g) enter into
transactions with affiliates of the Company; (h) pay dividends to, or redeem the
shares of, stockholders of the Company other than pursuant to an existing
restricted stock purchase agreement with current or former employees; and (i)
amend the Certificate of Incorporation or the Bylaws of the Company.
6.2 No Solicitation. The Company shall not, and shall cause its
Subsidiaries and the officers, directors, employees, representatives (including,
without limitation, investment bankers, attorneys and accountants), agents or
affiliates of the Company and its Subsidiaries not to, directly or indirectly,
(i) solicit, initiate, encourage or facilitate any inquiries or the making of
the proposal or offer with respect to an Alternative Proposal or (ii)
participate in any discussions or negotiations with, or provide any non-public
information to, or afford any access to the properties, books or records of the
Company or any of its Subsidiaries, or otherwise take any other action to assist
or facilitate (including granting any waiver or release under any standstill or
similar agreement with respect to any securities of the Company or any of its
Subsidiaries), any "person" or "group" (as such terms are used for purposes of
Section 13(d)(3) of the
25
Exchange Act) (other than the Purchasers or any Affiliate or associate of the
Purchasers) concerning any Alternative Proposal.
6.3 Reasonable Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Requirements of
Law to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement. Without limiting
the foregoing, each of the Company and the Purchasers shall use its reasonable
best efforts to make promptly any required submissions under any applicable
Requirements of Law that the Company or the Purchasers determines should be
made, in each case, with respect to the transactions contemplated hereby and to
respond as promptly as practicable to all inquiries received from any
Governmental Authority with respect to such submissions for additional
information or documentation.
6.4 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issue or delivery upon conversion of the Purchased Shares and
exercise of the Warrants, as provided in the Certificate of Designations and the
Warrants, respectively, the maximum number of shares of Common Stock that may be
issuable or deliverable upon such conversion or exercise. Such shares of Common
Stock are duly authorized and, when issued or delivered in accordance with the
Certificate of Designations and the Warrants, shall be validly issued, fully
paid and non-assessable. The Company shall issue such shares of Common Stock, in
accordance with the terms of the Certificate of Designations and the Warrants,
and otherwise comply with the terms hereof and thereof.
6.5 NASDAQ Listing.
(a) The Company shall use its best efforts to prevent the
Common Stock from being delisted on NASDAQ, including without limitation, (i)
taking all actions reasonably related to maintaining NASDAQ listing standards,
(ii) following recommendations by NASDAQ or advice of counsel and (ii)
refraining from taking actions reasonably expected to cause the Company to not
meet NASDAQ listing standards.
(b) If requested by the Company, each Purchaser shall use
commercially reasonable efforts to assist the Company in preparing any materials
to be submitted to NASDAQ by the Company for the purposes of maintaining the
Company's listing thereon.
6.6 Insurance. The Company currently maintains insurance with an
insurance company or association and it shall continue to maintain such
coverage.
6.7 Tax Reporting. The Company shall not treat the Purchased Shares
as "preferred stock" for purposes of the Code, including but not limited to
Section 305 thereof.
26
6.8 Books and Records. The Company and its Subsidiaries shall keep
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Company
and its Subsidiaries in accordance with GAAP consistently applied.
6.9 Back-ups of Computer Software. The Company and its Subsidiaries
shall make back-ups of all material computer software programs and databases and
shall maintain such software programs and databases at a secure off-site
location.
6.10 Inspection. The Company shall permit representatives of the
Purchasers to visit and inspect any of its and its Subsidiaries properties, to
examine their corporate, financial and operating records and make copies thereof
or abstracts therefrom, and to discuss their affairs, finances and accounts with
their respective directors, officers and independent public accountants, all at
such reasonable times during normal business hours and as often as may be
reasonably requested upon reasonable advance notice to the Company.
6.11 Board of Directors. Immediately following the Closing, the
Board of Directors shall convene a meeting to elect, by a majority vote of all
of the members of the Board of Directors, including the directors elected by the
holders of the Preferred Stock, a Chairman of the Board of Directors designated
by the Purchasers.
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the date that is ninety (90) days after the
receipt by the Purchasers of audited financial statements of the Company for the
fiscal year ending December 31, 2002 (or, if such fiscal year changes and no
such audited consolidated financial statements are available, then the successor
fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 3.8(b) and 3.14, which
representations and warranties shall survive until the third anniversary of the
Closing Date, and (b) Section 3.11 which shall survive until the later to occur
of (i) the lapse of the statute of limitations with respect to the assessment of
any Tax to which such representation and warranty relates (including any
extensions or waivers thereof) and (ii) sixty (60) days after the final
administrative or judicial determination of the Taxes to which such
representation and warranty relates, and no claim with respect to Section 3.11
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have given notice to the other parties to this Agreement prior to the
termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom.
27
7.2 Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the Company:
▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
(b) if to any of the Purchasers:
c/o General Atlantic Service Corporation
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
All such notices, demands and other communications shall be deemed
to have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 7.2 designate another address or
Person for receipt of notices hereunder.
7.3 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to applicable securities laws
and the terms and
28
conditions thereof, the Purchasers may assign any of their rights under this
Agreement or the Registration Rights Agreement to any of their respective
Affiliates. The Company may not assign any of its rights under this Agreement
without the written consent of the Purchasers. Except as provided in Article V,
no Person other than the parties hereto and their successors and permitted
assigns is intended to be a beneficiary of this Agreement.
7.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and each of the Purchasers and (ii)
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement, no notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances.
7.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
7.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
7.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
7.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
29
7.10 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto, and the Registration Rights Agreement are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the Registration Rights Agreement
supersede all prior agreements and understandings between the parties with
respect to such subject matter.
7.11 Fees. Upon the Closing, the Company shall reimburse the
Purchasers for all of their reasonable fees, disbursements and other charges of
counsel reasonably incurred in connection with the transactions contemplated by
this Agreement up to an aggregate amount of $100,000.
7.12 Publicity; Confidentiality. Except as may be required by
applicable Requirements of Law, none of the parties hereto shall issue a
publicity release or public announcement or otherwise make any disclosure
concerning this Agreement, the transactions contemplated hereby, the Purchasers
or the business, technology and financial affairs of the Company, without prior
approval by the other parties hereto; provided, however, that nothing in this
Agreement shall restrict any of the Purchasers from disclosing information (a)
that is already publicly available, (b) that was known to such Purchaser on a
non-confidential basis prior to its disclosure by the Company, (c) that may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, provided that such Purchaser will use reasonable efforts to
notify the Company in advance of such disclosure so as to permit the Company to
seek a protective order or otherwise contest such disclosure, and such Purchaser
will use reasonable efforts to cooperate, at the expense of the Company, with
the Company in pursuing any such protective order, (d) to the extent that such
Purchaser reasonably believes it appropriate in order to protect its investment
in the Purchased Shares or in order to comply with any Requirement of Law, (e)
to such Purchaser's or the Company's officers, directors, shareholders,
advisors, employees, members, partners, controlling persons, auditors or counsel
or (f) to Persons from whom releases, consents or approvals are required, or to
whom notice is required to be provided, pursuant to the transactions
contemplated by the Transaction Documents; and provided further, that GAP LLC
may disclose on its worldwide web page, ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇, the name of the
Company, the name of the Chief Executive Officer of the Company, a brief
description of the business of the Company, the Company's logo and the aggregate
amount of the Purchasers' investment in the Company. If any announcement is
required by applicable law or the rules of any securities exchange or market on
which such shares of Common Stock are traded to be made by any party hereto,
prior to making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties reasonable
opportunity to comment thereon.
7.13 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or
30
making any filings with, any Governmental Authority or any other Person) as may
be reasonably required or desirable to carry out or to perform the provisions of
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Securities Purchase Agreement on the date first written above.
▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
GENERAL ATLANTIC PARTNERS, 74, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: A Managing Member
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: A General Partner
GAPSTAR, LLC
By: GENERAL ATLANTIC PARTNERS, LLC,
its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: A Managing Member
Schedule 2.1
Purchased Shares, Warrants and Purchase Price
Purchaser Purchased Shares Warrants Purchase Price
--------- ---------------- -------- --------------
GAP LP 7,003,889 1,487,626 $ 16,529,178.00
GapStar 124,524 26,449 $ 293,877.00
GAP Coinvestment 1,346,163 285,925 $ 3,176,945.00
Total: 8,474,576 1,800,000 $ 20,000,000.00