ASK JEEVES, INC.
COMMON STOCK AND WARRANT TO PURCHASE COMMON STOCK
PURCHASE AGREEMENT
_________________________
AUGUST 20, 1999
COMMON STOCK AND WARRANT TO PURCHASE COMMON STOCK
PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT TO PURCHASE COMMON STOCK PURCHASE
AGREEMENT (the "Agreement") is entered into effective as of August 20, 1997,
by and between ASK JEEVES, INC., a California corporation (the
"Corporation"), and those investors who may become parties to this agreement
as contemplated in Section 2.3 below and set forth in Schedule 1 attached
hereto from time to time, including, but not limited to, ▇▇▇▇▇ ▇▇▇▇▇▇▇, an
individual ("▇▇▇▇▇▇▇"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), an individual (together
with ▇▇▇▇▇▇▇, the "Initial Purchasers") (and each such party individually, a
"Purchaser" and collectively the "Purchasers"); THE RODA GROUP VENTURE
DEVELOPMENT COMPANY, LLC, a Delaware limited liability company ("Roda"); and
▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇▇").
RECITALS:
A. The Corporation is in the business of Internet navigation
products and services.
B. The Purchasers are interested in investing capital in the
Corporation and the Corporation desires to obtain capital from the Purchasers
on the terms and conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the above recitals and the mutual
agreements, covenants, representations and warranties contained below in
this. Agreement, the parties agree as follows:
I. DEFINITIONS.
1.1 "Agreement" means, and the words "herein", "hereof",
"hereunder" and words of similar import refer to, this instrument and any
amendments hereto.
1.2 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute which replaces said Exchange Act and
the rules and regulations of the SEC thereunder, all as the same shall be in
effect at the time.
1.3 "Securities Act" means the Securities Act of 1933, as
amended, or any similar Federal statute which replaces such Securities Act
and the rules and regulations of the SEC thereunder, all as the same shall be
in effect at the time.
1.4 "Party" or "parties" means the Corporation and/or any
Purchaser.
1.5 "Person" means any individual, corporation; trust,
partnership, association, or other entity.
1.
1.6 "SEC" means the Securities and Exchange Commission.
II. SALE AND ISSUANCE OF COMMON STOCK AND COMMON STOCK WARRANTS.
2.1 PURCHASE AND SALE OF COMMON STOCK. The Corporation agrees to
sell to each Purchaser meeting the suitability standards set forth in Article
VI, and, subject to the terms and conditions set forth herein, each such
Purchaser (or it's assigns who meet such suitability standards) agrees to
purchase from the Corporation, the Common Stock set forth opposite its name
in Schedule 1 attached hereto at a per share purchase price of $0.6922 and in
the amounts and on or before the dates set forth therein.
2.2 PURCHASE AND SALE OF COMMON STOCK WARRANTS. Simultaneously
with the sale and purchase of each two shares of Common Stock, the
Corporation shall issue to each Purchaser a six month warrant in form and
substance attached hereto as Exhibit A ("Common Stock Warrant") to purchase
one share of the Corporation s Common Stock at an exercise price of $0.6922
per share.
2.3 ISSUANCE AND PAYMENT. The initial closing of the sale and
purchase of the Common Stock and Common Stock Warrants will take place at the
offices of PEZZOLA & ▇▇▇▇▇▇, APC, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on August 20, 1997, or such other time and
place as the parties may mutually agree (the "Initial Closing"). At each
"Closing" (as defined in Section 2.4), the Corporation will deliver to each
Purchaser a duly issued and executed certificate of the Common Stock and duly
issued and executed Common Stock Warrant to be purchased by it, registered in
the Purchaser's name, against payment of the purchase price thereof as set
forth in Schedule 1, by certified check, by wire transfer of immediately
available funds, or by any combination of the foregoing.
2.4 SUBSEQUENT SALE OF COMMON STOCK AND COMMON STOCK WARRANT.
The Corporation may sell up to $100,000of additional Common Stock and
corresponding Common Stock Warrants to such additional persons as the
Corporation may also determine for up to sixty (60) days after the Initial
Closing upon substantially the same terms and conditions as those contained
herein, and each such person shall have the rights and obligations of a
Purchaser hereunder. The Corporation shall notify the Initial Purchasers of
any such sales. Initial Purchasers shall have thirty (30) days after such
notice to purchase collectively an equal amount of such additional Common
Stock and corresponding Common Stock Warrants on the same terms and
conditions. The Initial Closing and each subsequent closing, whether under
Section 2.3 or this Section 2.4 shall be referred to herein as a "Closing."
III. CONDITIONS OF THE PURCHASERS' OBLIGATIONS. The obligation of each
Purchaser to consummate the transactions contemplated herein at a Closing is
subject to the satisfaction on or before the date of such Closing of the
following conditions, all or any of which may be waived in writing by each
Purchaser as to its obligation to consummate the transaction so contemplated:
3.1 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Corporation contained in this Agreement, including
without limitation those in Article V, and in
2.
any other documents delivered by the Corporation to the Purchasers at or
prior to the Initial Closing will be true and correct at and as of the date
of the Initial Closing as though then made, except to the extent of changes
caused by the transactions expressly contemplated herein, and the Corporation
shall have delivered a certificate executed by the President of the
Corporation to such effect.
3.2 CLOSING DOCUMENTS. The Corporation will have delivered to
each Purchaser, copies of the following documents:
(a) an Officer's Certificate from the Corporation dated the date
of the Initial Closing, stating that all the preconditions specified in this
Article III have been satisfied;
(b) correct and complete copies of the resolutions adopted by the
board of directors certified to such effect on the date of the Initial
Closing by the President of the Corporation authorizing the execution,
delivery and performance of this Agreement and any other agreements
contemplated hereby, and authorizing all other transactions contemplated by
this Agreement;
(c) correct and complete copies of the Corporation's Bylaws and
Articles of Incorporation as approved by the board of directors and
shareholders of the Corporation, all certified to such effect on the date of
the Initial Closing by the President of the Corporation and;
(d) a good standing certificate dated within thirty (30) days of
the Initial Closing issued by the California Secretary of State.
3.3 PROCEEDINGS. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby to be
consummated at or prior to the Initial Closing and all documents incident
thereto or required to be delivered prior to or at the Closing will be
satisfactory inform and substance to each Purchaser.
3.4 EXAMINATION OF BOOKS AND RECORDS. The Corporation shall have
made available to each Purchaser (who may appoint representatives to perform
such inspection) during normal business hours, for inspection and copying,
all of the Corporation's books, records, contracts and documents of or
relating to the Corporation.
3.5 AUTHORIZED NUMBER OF BOARD MEMBERS; INITIAL OFFICERS. The
authorized number of members of the board of directors of the Corporation
shall be between four (4) and seven (7), with the initial number of
authorized directors to be established at four (4) at the Initial Closing,
with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ as the
directors as of the Initial Closing; provided, however, that if (i) the
Initial Purchasers have not collectively invested at least $333,334 on, or
prior to, the Second Closing (as identified in Schedule 1 ) or if (ii) the
Initial Purchasers have not collectively invested at least $500,000 on, or
prior to, the Third Closing (as identified in Schedule 1) then ▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇ ▇▇▇▇▇▇ shall, at the request of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇,
immediately resign as Directors of the Corporation. At the Closing, the
officers of the Corporation shall be as follows:
3.
NAME TITLE
▇▇▇▇▇ ▇▇▇▇▇▇▇ Chairman of the Board;
▇▇▇ ▇▇▇▇▇▇ President
▇▇▇▇▇ ▇▇▇▇▇▇▇ Executive Vice President; Chief Technical Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇ Secretary
3.6 SUITS/PROCEEDINGS. No action, suit, proceeding or
investigation by or before any court, administrative agency or other
governmental authority shall have been instituted or threatened to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
3.7 AUTHORIZATION OF ISSUANCE. The Corporation's board of
directors will have authorized the issuance and sale by it to the Purchasers
pursuant to this Agreement of the Common Stock and Common Stock Warrants.
3.8 RESERVATION OF STOCK. The Corporation's board of directors
will have reserved sufficient shares of its authorized but unissued Common
Stock for the exclusive purpose of issuance upon exercise of the Common Stock
Warrants.
3.9 CAPITAL OUTSTANDING. As of the Initial Closing (but without
giving effect thereto), the Corporation will have a total of no more than
that number of shares of Common Stock issued and outstanding as listed and
described in Section 5.2. As of the Initial Closing, the Corporation will
have no outstanding options, convertible securities or warrants other than as
listed and described on Schedule 5.
IV. CONDITIONS OF THE CORPORATION'S OBLIGATIONS.
The obligation of the Corporation to issue the Common Stock and
Common Stock Warrants with respect to any one Purchaser is subject to the
satisfaction on or before the date of each Closing of the following
conditions with respect to such Purchaser, all or any of which may be waived
in writing by the Corporation:
4.1 PERFORMANCE. Each Purchaser shall have duly performed and
complied in all material respects with each of the terms, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
4.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser contained in Article VI and in any other
documents delivered at or prior to the Closing shall be true and accurate on
and as of the Closing with the same effect as though made on and as of the
date of the Closing.
4.3 INSTRUMENTS AND DOCUMENTS. All instruments and documents
required to carry out under this Agreement or incidental thereto shall be
reasonably satisfactory to the Corporation and its counsel.
4.4 SUITS/PROCEEDINGS. No action, suit, proceeding or
investigation by or before any court, administrative agency or other
governmental authority shall have been instituted or threatened to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
4.
V. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
Except as set forth on Schedule 5 attached hereto and incorporated
herein by reference, the Corporation hereby represents and warrants to each
Purchaser as of the date hereof and as of the Initial Closing as follows:
5.1 ORGANIZATION AND CORPORATE POWER. The Corporation is a
corporation duly organized,, validly existing and in good standing under the
laws of California and is qualified as a foreign corporation in all
jurisdictions in which the nature of its property owned or leased by it or
the conduct of its business requires such qualification, except for such
jurisdictions where the failure to so qualify would not individually or in
the aggregate materially and adversely affect the business, operations and
financial condition of the Corporation. The Corporation has all requisite
corporate power and authority necessary to own and operate its properties and
to carry on its business as now conducted and to enter into and to carry out
the provisions of this Agreement and the transactions contemplated hereby.
The Corporation has no subsidiaries or affiliated companies and does not
otherwise directly or indirectly control or own any other business entity.
5.2 CORPORATE CAPITALIZATION.
(a) AUTHORIZED CAPITAL STOCK. Immediately prior to the
Closing, the Corporation's authorized capital stock shall include only one
authorized class of capital stock, consisting solely of Three Million
(3,000,000) shares of Common Stock. Immediately prior to the Initial Closing
(without taking into consideration the Initial Closing), the Corporation will
have a total of Nine Hundred Ninety-one Thousand Six Hundred Sixty-six
(991,666) shares of Common Stock outstanding. All such issued and
outstanding shares have been duly authorized and validly issued, are fully
paid and nonassessable.
(b) OUTSTANDING OPTIONS/WARRANTS/CONVERTIBLE NOTES.
There are also issued and outstanding an aggregate of 91,834 stock options as
more fully set forth on Schedule 5. There are otherwise no outstanding
preemptive or other rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Corporation of any shares
of its capital stock, except as set forth in Schedule 5. All such securities
have been duly authorized and validly issued.
(c) DIVIDENDS. The Corporation does not have any
declared and unpaid dividends (whether payable in cash, securities or other
consideration).
5.3 CORPORATE COMPLIANCE; AUTHORIZATION.
(a) COMPLIANCE WITH INSTRUMENTS. The Corporation is not in violation,
breach or default of any term of its Articles of Incorporation or Bylaws, or
in any respect, of any material term or provision of any mortgage, indenture,
contract, agreement, instrument, judgment, decree, order, statute, rule or
regulation applicable to or binding upon the Corporation.
(b) AUTHORIZATION. All corporate action on the part of
the Corporation, its officers, directors and shareholders, necessary for the
sale and issuance of the Common Stock and Common Stock Warrants and any
common stock issuable upon exercise of the Common
5.
Stock Warrants and the performance of the Corporation's obligations hereunder
has been taken or will be taken prior to the Initial Closing. This
Agreement, and the Common Stock Warrant are each legal, valid and binding
obligations of the Corporation enforceable in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium or other laws and equitable principles relating to or
affecting the enforcement of creditors' rights in general and by general
principles of equity.
5.4 TITLE TO PROPERTY. The Corporation has good and marketable
title to all of its properties and assets free and clear of restrictions or
conditions on transfer or assignment and free and clear of mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions or restrictions, except for current taxes and
assessments not delinquent and for matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with
the present or intended use of any of these assets, nor materially impair the
business or proposed operation of the Corporation.
5.5 PATENTS AND OTHER INTANGIBLE RIGHTS. To the best knowledge
of the Corporation, the Corporation has good title (without any unlawful
misappropriation) to all patents, if any, copyrights, trade names and service
marks covering the Corporation's existing technology and proprietary property
rights, including but not limited to, the trademarks listed on Schedule 5,
the software listed on Schedule 5 (the "Software") and any invention, trade
secrets, or intellectual property rights (collectively the "Trade Secret
Property Rights"), or adequate licenses and rights to use the Trade Secret
Property Rights of others on terms deemed favorable by the Corporation, which
are necessary for the conduct of the business of the Corporation as now
conducted or as proposed to be conducted. To the best knowledge of the
Corporation, the Company is not infringing upon or otherwise acting adversely
to the right or claimed right of any person with respect to any of the
foregoing. To the best knowledge of the Corporation, no officer, director or
employee of the Corporation is under any restriction, whether contractual, or
by virtue of previous employment or otherwise, that would prevent him from
performing his duties for the Corporation or prevent the Corporation from
using the Trade Secret Property Rights. To the best knowledge of the
Corporation, no employee or consultant of the Corporation is in violation of
any term of any proprietary information or confidentiality agreement with the
Corporation. The development of the Software has not been performed by any
third party who has not assigned his copyright rights to the Corporation.
The Software (i) is not jointly owned with any other party; and (ii) to the
best knowledge of the Corporation, is free and clear of restrictions or
conditions on transfer or assignment and free and clear of mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions or restrictions, except for current taxes and
assessments not delinquent and for matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with
the present or intended use of any of these assets, nor materially impair the
business or proposed operation of the Corporation.
5.6 LITIGATION. There are no (a) actions, proceedings or
investigations pending or any threat thereof, or verdicts or judgments
entered against the Corporation before any court or before any administrative
agency or officer which might result, individually or in the aggregate, in
any material adverse change in the business, properties and condition,
financial or otherwise, of the Corporation or (b) violations by the
Corporation of any foreign, federal, state or local laws, regulations or
orders.
6.
5.7 TAX RETURNS AND PAYMENTS. The Corporation has not yet filed
its federal or state income tax returns for its first fiscal year ended May
31, 1997, but will file such returns in a timely manner.
5.8 EMPLOYEE COMPENSATION/LABOR RELATIONS. The Corporation has
no knowledge of any attempt to organize the employees of the Corporation, and
the Corporation is not a party to any collective bargaining agreement. There
are no strikes, work stoppages, grievance proceedings, or other material
controversies pending or to the knowledge of the Corporation threatened
between the Corporation and any employees engaged in the business of the
Corporation or any union or collective bargaining unit representing such
employees. The Corporation has complied in all material respects with all
laws relating to the employment of labor, including provisions relating to
wages, hours, equal opportunity, collective bargaining, and payment of Social
Security and other taxes.
5.9 MATERIAL LICENSES, AGREEMENTS, RELATED PARTY AGREEMENTS.
Except as set forth in Schedule 5, the Corporation is not a party to, nor is
its property bound by, (a) any agreement (i) requiring the performance by the
Corporation of any obligation for a period of time extending beyond one year
from the Closing, or (ii) calling for or which could result in the receipt of
consideration or payment of more than $10,000 individually or $50,000 in the
aggregate, or (b) any agreement or understanding between the Corporation and
any shareholder, officer, director, or employee of the Corporation or
relatives or spouses thereof other than employee compensation, employee stock
purchase and benefits agreements entered into in the ordinary course of
business.
5.10 FINANCIAL STATEMENTS. The Corporation has delivered to each
Purchaser the financial statements identified on Schedule 5 (collectively,
the "Financial Statements"). The Financial Statements are true, complete and
correct in all material respect and accurately set out and describe the
financial condition and operating results of the Corporation as of the dates,
and for the periods, indicated thereon.
5.11 FEES, COMMISSIONS AND EXPENSES. The Corporation has made no
agreements or arrangements for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement.
5.12 GOVERNMENTAL CONSENT, ETC. Except for applicable state blue
sky and Regulation D Form D filings, no consent, approval, order,
authorization, registration, qualification, designation, license, declaration
or filing with any federal, state or municipal authority is required on the
part of the Corporation in connection with consummation of the transactions
contemplated herein.
5.13 VALIDITY OF ISSUANCE. The Common Stock issuable upon
exercise of the Common Stock Warrants to be purchased and sold pursuant to
this Agreement, will, when issued, sold, and delivered, be duly and validly
issued, fully paid and nonassessable, and will be free and clear of any liens
or encumbrances caused or created by the Corporation and, assuming the
accuracy and completeness of the Purchaser's representations hereunder, will
have been issued in compliance with all applicable state and federal
securities laws.
7.
5.14 LIABILITIES. The Corporation does not have any debt,
liability or obligation of any nature, whether accrued, absolute or
contingent, and whether due or to become due, that is not reflected or
reserved against in the Financial Statements, except for those that may have
been incurred after the date of the Financial Statements in the ordinary
course of business.
5.15 BOOKS AND RECORDS. The financial records and books of
account of the Corporation are complete and correct, and have been maintained
in accordance with good business practices and are fairly reflected in the
Financial Statements.
5.16 POWERS OF ATTORNEYS. The Corporation has no powers of
attorney outstanding.
5.17 FOREIGN CORRUPT PRACTICES ACT. Neither the Corporation nor,
to its best knowledge, any Director, officer, agent, employee or other person
associated with or acting on behalf of the Corporation has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or government
employee from corporate funds; or (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977.
5.18 REAL PROPERTY HOLDING CORPORATION STATUS. Since its date of
incorporation (and that of its earliest predecessor, if any) the Corporation
has not been a "United States real property holding corporation", as defined
in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the
"Code") and in Section 1.897-2(b) of the Regulations thereto, and the
Corporation has filed with the Internal Revenue Service all statements, if
any, with its United States income tax returns which are required under
Section 1.897-2(h) of the Regulations.
5.19 ENVIRONMENTAL AND SAFETY LAWS. To the Corporation's best
knowledge, the Corporation is in compliance with all environmental laws and
all applicable statutes, laws or regulations relating to occupational health
and safety, except where the failure to so comply has not had and is not
reasonably likely to have a material adverse effect on the business,
financial condition or prospects of the Corporation. The Corporation has
not, since inception, received any written communication from a governmental,
quasi-governmental or regulatory department or authority, citizens' group or
director, officer or employee of the Corporation, alleging that the
Corporation is not in compliance with or has violated any environmental law
or any applicable statute, law or regulation relating to occupational health
and safety. The Corporation is not aware of any past or present actions,
activities, circumstances, conditions, events or incidents that could
reasonably be expected to form the basis of any environmental claim against
the Corporation.
5.20 CHANGES. Since July 31, 1997, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Corporation from that reflected in the
Financial Statements, except changes in the ordinary course of business which
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets,
properties, financial condition, operating results,
8.
prospects or business of the Corporation (as such business is presently
conducted and as it is proposed to be conducted);
(c) any material change or amendment to a material
contract or arrangement of which the Corporation or any of its assets or
properties is bound or subject;
(d) any material change in any compensation arrangement
or agreement with any employee;
(e) any resignation or termination of employment of any
key officer or employee of the Corporation; or
(f) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Corporation.
5.21 SURVIVAL OF REPRESENTATIONS. All representations made by the
Corporation in or under this Agreement shall be true and accurate as of the
Initial Closing and shall survive the Initial Closing for a period of three
(3) years thereafter (except for those changes contemplated in and provided
for by this Agreement).
VI. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. As of the Closing,
each Purchaser represents and warrants to the Corporation as to itself that:
6.1 INVESTMENT. The Purchaser is acquiring the Common Stock,
Common Stock Warrants and any Common Stock issuable upon exercise of the
Common Stock Warrants for investment purposes only for its own account, and
not with a view to, or for resale in connection with, any distribution
thereof, and it has no present intention of selling or distributing any such
securities. Purchaser understands that the Common Stock and Common Stock
Warrants (and any shares of Common Stock issued upon exercise of the Common
Stock Warrants) have not been registered under the Securities Act by reason
of a specific exemption from the registration provisions of the Securities
Act which depends upon, among other things, the bona fide nature of the
investment as expressed herein. All such securities are hereinafter
collectively referred to as the "Securities".
6.2 RULE 144. The Purchaser acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. It is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement under certain
circumstances.
6.3 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Corporation and
that it is uncertain whether a public market will ever exist for any such
securities.
6.4 ACCESS TO DATA. The Purchaser has had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information necessary or appropriate
for deciding whether or not to purchase the Securities.
9.
6.5 KNOWLEDGE AND EXPERIENCE. Purchaser has such knowledge and
experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of
the investment in the Securities, and it is able to bear the economic risk of
such investment. Further, the individual executing this Agreement has such
knowledge and experience in financial and business matters that he or she is
capable of utilizing the information made available to him or her in
connection with the offering of the Securities, of evaluating the merits and
risks of an investment in the Securities and of making an informed investment
decision with respect to the Securities.
6.6 REQUISITE POWER. The Purchaser has all requisite power and
authority necessary to enter into and to carry out the provisions of this
Agreement and the transactions contemplated hereby.
6.7 DULY AUTHORIZED. All action on the part of the Purchaser
necessary for the purchase of its Securities and the performance of the
Purchaser's obligations hereunder has been taken or will be taken prior to
the Closing. This Agreement is a legal, valid and binding obligation of the
Purchaser enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws and equitable principles relating to or affecting
the enforcement of creditors' rights in general and by general principles of
equity.
6.8 ACCREDITED INVESTOR. Purchaser is an "accredited investor"
as that term is defined in Regulation D promulgated by the Securities and
Exchange Commission. The term "Accredited Investor" under Regulation D
refers to:
(a) A person or entity who is a director or executive
officer of the Corporation;
(b) Any bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered pursuant to
Section 15 of the Exchange Act; insurance Corporation as defined in Section
2(13) of the Securities Act; investment Corporation registered under the
Investment Corporation Act of 1940; or a business development Corporation as
defined in Section 2(a)(48) of that Act; Small Business Investment
Corporation licensed by the U.S. Small Business Administration under Section
301 (c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000;employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made by
a plan fiduciary, as defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance Corporation, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5,000,000or, if a self-directed plan, with investment decision
made solely by persons that are accredited investors;
(c) Any private business development Corporation as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
10.
(d) Any organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Securities offered, with total assets in excess of $5,000,000;
(e) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(f) Any natural person who had an individual income in
excess of $200,000 during each of the previous two years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;
(g) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Securities offered,
whose purchase is directed by a person who has such knowledge and experience
in financial and business matters that he is capable of evaluating the merits
and risks of the prospective investment; or
(h) Any entity in which all of the equity owners are
accredited investors.
As used in this Section 6.8, the term "net worth" means the excess of total
assets over total liabilities. For the purpose of determining a person's net
worth, the principal residence owned by an individual should be valued at
fair market value, including the cost of improvements, net of current
encumbrances. As used in this Section 6.8, "income" means actual economic
income, which may differ from adjusted gross income for income tax purposes.
Accordingly, the undersigned should consider whether it should add any or all
of the following items to its adjusted gross income for income tax purposes
in order to reflect more accurately its actual economic income: Any amounts
attributable to tax-exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depletion,
contributions to an ▇▇▇ or ▇▇▇▇▇ retirement plan, and alimony payments.
VII. RESTRICTIONS ON TRANSFER OF SECURITIES.
The Securities are not transferable except upon the conditions
specified in this Article VII, which conditions are intended to ensure
compliance with the provisions of the Securities Act and state securities
laws in respect of the transfer of any of such securities. Each instrument
representing the Securities shall be stamped or otherwise imprinted with
legends substantially in the following form until such time as the conditions
set forth in such legends have been met:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR
THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE
SECURITIES SATISFACTORY TO THE CORPORATION STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY
11.
REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS UNDER
STATE LAW."
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME, NOT TO
EXCEED ONE HUNDRED EIGHTY (180) DAYS FROM THE EFFECTIVE DATE OF
THE CORPORATION'S FIRST UNDERWRITTEN PUBLIC OFFERING.
In connection with the first underwritten registration of the
Corporation's securities, each Purchaser agrees, upon the request of the
Corporation and the underwriters managing such underwritten offering of the
Corporation's securities, not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Common Stock
without the prior written consent of the Corporation and such underwriters,
as the case may be, for such period of time, not to exceed one hundred eighty
(180) days, from the effective date of such registration as the underwriters
may specify. The Corporation and underwriters may request such additional
written agreements in furtherance of such standoff in the form reasonably
satisfactory to the Corporation and such underwriter.
The Corporation shall be entitled to enter stop transfer notices on
its stock books with respect to the Securities until the conditions as set
forth in the legends above with respect to the transfer of such securities
have been met.
VIII. MANAGEMENT SERVICES/OFFICE SPACE.
8.1 MANAGEMENT SERVICES. Commencing on the date of the Initial
Closing, the Initial Purchasers (in such capacity, the "Managers") hereby
agree to provide management services to the Corporation for the management of
the daily operations of the Corporation, including but not limited to those
services customarily performed by president of a start-up Internet company
with venture financing for a period of time no longer than December 31, 1998
and on the terms and conditions set forth below (the "Management Services").
The Managers together shall devote approximately one full-time "person month"
per month or more in the performance of their duties on behalf of the
Corporation. The Managers shall perform the Management Services in a first
class professional manner, and in no event with less effort or diligence than
is customary for start-up companies of this nature. The Management Services
and the Corporation's obligation to pay for such services shall automatically
terminate prior to December 31, 1998 upon the earlier to occur of (i)
termination by the Corporation's Board of Directors with no less than
fourteen (14) days' written notice or (ii) the first day of employment of a
new Chief Executive Officer to be hired and elected by the Board of Directors
(the "Termination Date").
8.2 MANAGEMENT SERVICES FEE; INCENTIVE. The Managers shall
receive no fee for providing the Management Services through December 31,
1998 (the "Expiration Date"); provided however, the Managers shall be
entitled to receive reimbursement from the Corporation for reasonable and
customary documented expenses incurred on behalf of the Corporation. As an
incentive to the Managers for the provision of the Management Services from
the Date of Closing and for a period of the earlier of (i) sixteen months
thereafter; (ii) the Termination Date; or (iii) the date the Management
Services cease, the Corporation shall issue beginning on the last
12.
day of each month commencing March, 1998 (each, a "Payment Date") and ending
on the Expiration Date to each Manager a non-qualified stock option issued
pursuant to the terms and conditions of the Corporation's 1996 Equity
Incentive Plan and corresponding Stock Option Agreement (each, a "Stock
Option"). Each Stock Option shall have an exercise price per share (the
"Exercise Price") equal to 0.25 times the fair market value of the
Corporation's Common Stock on the applicable Payment Date as determined by
the per share price in the most recent arms-length sale of the Corporation's
Common Stock (the "Fair Market Value"). Each Stock Option shall entitle the
holder thereof to purchase that number of shares equal to the quotient
obtained by dividing $7,500 by the number obtained by subtracting the
Exercise Price from the Fair Market Value (the "Option Shares"). All Stock
Options shall be fully vested and have a term of five (5) years commencing on
the Closing Date. The right to receive Stock Options shall automatically
cease on the Termination Date. To reduce administrative costs, the Board of
Directors may issue to each Manager an option quarterly rather than monthly
for the aggregate Option Shares to which each Manager is entitled herein.
Subject to the foregoing, the Common Stock to be issued pursuant to the Stock
Options shall be issued pursuant to and under the Corporation's standard
Stock Option Agreement adopted by the Board of Directors.
8.3 CONFIDENTIALITY. Managers shall not at any time disclose,
publicize, disseminate or examine or copy any of the Corporation's
confidential information, including but not limited to, business plans,
results of operations, forecasts, financials or any other information related
to the Corporation not in the public domain (the "Confidential Information"),
nor utilize for its own benefit or for the benefit of any other party any
such Confidential Information. Upon request by the Corporation, each Manager
customary confidentiality agreement used from time to time by the Corporation
for its employees and independent contractors.
8.4 ASSIGNMENT OF MANAGEMENT SERVICES. The Managers may assign
their obligations under Section 8.1 and Article X as it pertains to Section
8.1 to Roda provided that (i) ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ perform
the Management Services on behalf of Roda in accordance with Section 8.1 and
at the Corporation's direction enter into the Corporation's customary
confidentiality agreement used from time to time by the Corporation for its
employees and independent contractors; and (ii) Roda agrees to comply with
Sections 8.1,8.2 and 8.3 of this Article VIII.
8.5 OFFICE SPACE. Beginning on the date of the Initial Closing,
Roda shall lease (the "Lease") to the Corporation for a term to expire on
December 31, 1998 unless terminated earlier by the Corporation upon at least
thirty (30) days' prior written notice (the "Term") approximately 1700 square
feet of office space at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Premises"). The Corporation shall pay to Roda as rent for the Premises not
more than $200 per employee of the Corporation per month who are on the
Corporation's payroll on the first day of each month during the Term;
provided, however, that the Corporation shall pay no less than $1,200 per
month and no more than $5,000 per month as rent per month to Roda regardless
of the number of the Corporation's employees (the "Rent"). The Lease shall
be a gross lease and contain such other terms and conditions as are agreed
upon by the parties in the form of Exhibit B attached hereto and incorporated
herein by reference.
13.
IX. ▇▇▇▇▇▇▇ EMPLOYMENT TERMS. Effective as of the Initial Closing, the
Corporation shall employ ▇▇▇▇▇▇▇ to act as the Corporation's full time
Executive Vice President and Chief Technical Officer on the following terms
and conditions (the "Employment Engagement"):
9.1 SALARY. The Employment Engagement shall provide for an
annual salary of $80,000 payable in cash in semimonthly installments of
$3,333.33 less applicable state and federal withholding taxes. ▇▇▇▇▇▇▇ shall
also receive a grant beginning on the last day of the month on which the
Agreement is signed and ending on December 31, 1998 to ▇▇▇▇▇▇▇ of a
non-qualified stock option issued pursuant to the terms and conditions of the
Corporation's 1996 Equity Incentive Plan and corresponding Stock Option
Agreement (each, a "▇▇▇▇▇▇▇ Option"). Each ▇▇▇▇▇▇▇ Option shall have an
exercise price per share (the "▇▇▇▇▇▇▇ Exercise Price") equal to 0.25 times
the fair market value of the Corporation's Common Stock on the applicable
Payment Date as determined by the per share price in the most recent
arms-length sale of the Corporation's Common Stock (the "▇▇▇▇▇▇▇ Fair Market
Value"). Each ▇▇▇▇▇▇▇ Option shall entitle ▇▇▇▇▇▇▇ to purchase that number
of shares equal to the quotient obtained by dividing $3,333.33 by the by the
number obtained by subtracting the ▇▇▇▇▇▇▇ Exercise Price from the ▇▇▇▇▇▇▇
Fair Market Value (the "▇▇▇▇▇▇▇ Option Shares"). All ▇▇▇▇▇▇▇ Options shall
be fully vested and have a term of five (5) years commencing on the Closing
Date. To reduce administrative costs, the Board of Directors may issue to
▇▇▇▇▇▇▇ an option quarterly rather than monthly for the aggregate ▇▇▇▇▇▇▇
Option Shares to which ▇▇▇▇▇▇▇ is entitled herein. Notwithstanding the
foregoing, if the Corporation (i) shows a profit for 2 consecutive months or
(ii) hires a Chief Executive Officer, then ▇▇▇▇▇▇▇ may elect to receive
$3,333.33 in cash rather than any later issued ▇▇▇▇▇▇▇ Option. The ▇▇▇▇▇▇▇
Option Shares shall be issued pursuant to and under the Corporation's
standard Stock Option Agreement adopted by the Board of Directors.
9.2 REPURCHASE OF STOCK. If ▇▇▇▇▇▇▇ voluntarily terminates his
employment with the Corporation prior to the sixth month anniversary of the
Initial Closing, then the Corporation shall have the right for up to thirty
(30) days following such voluntary termination to purchase up to two hundred
fifty thousand (250,000) shares of ▇▇▇▇▇▇▇'▇ stock in the Corporation
("▇▇▇▇▇▇▇'▇ Stock") at a purchase price of $0.6922 per share (subject to
adjustment for stock splits, combinations and the like). If ▇▇▇▇▇▇▇
voluntarily terminates his employment from the Corporation thereafter, then
the Corporation shall have the right for up to thirty (30) days following
such voluntary termination to purchase up to the number of ▇▇▇▇▇▇▇ Stock that
equals the remainder obtained by subtracting from 250,000 the product
obtained by multiplying 10,417 times the number of full months that have
elapsed since the Initial Closing (i.e. Fifteen months after the Initial
Closing, if ▇▇▇▇▇▇▇ voluntarily terminates his employment, then the
Corporation could repurchase 93,745 shares
[250 - (10,417 x 15) = 250,000 - 156,255 = 93,745]). If ▇▇▇▇▇▇▇ voluntarily
resigns from the Corporation on, or after, the 24th month following the
Initial Closing, then the Corporation shall have no right to repurchase from
▇▇▇▇▇▇▇ any ▇▇▇▇▇▇▇ Stock.
X. MISCELLANEOUS.
10.1 REMEDIES. Any Person having any rights under any provision
of this Agreement will be entitled to enforce such rights specifically, to
recover damages by reason of any breach of
14.
any provision of this Agreement, and to exercise all other rights granted by
law, which rights may be exercised cumulatively and not alternatively.
10.2 CONSENT TO AMENDMENTS. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the
Corporation may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if it has obtained the written
consent of Purchasers holding sixty-six and two-thirds percent (66-2/3%) or
more of the outstanding shares of Common Stock. No course of dealing between
the Corporation and any Purchaser or any delay in exercising any rights
hereunder or under the Corporation's Articles of Incorporation will operate
as a waiver of any rights of any such Purchaser. Notwithstanding the
foregoing, this Section 10.2 shall not be amended without the consent of all
Purchasers holding Common Stock.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by any
party in connection herewith will survive the execution and delivery of this
Agreement for a period of three (3) years after the Initial Closing.
10.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not.
10.5 SEVERABILITY. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of this
Agreement.
10.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts when taken together shall constitute one
and the same Agreement.
10.7 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
10.8 NOTICES. All notices, demands, consents or other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been given when personally delivered or upon receipt if
sent by first class certified mail, return receipt requested or the next
business day if sent by telefax (receipt confirmed and followed up by one of
the other delivery methods discussed herein as well), Express Mail, Federal
Express or similar service, addressed as follows:
If to Purchasers: To the Addresses set forth on Schedule 1
With a Copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Esq.
15.
If to the Corporation: Ask Jeeves, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a Copy to: Pezzola & ▇▇▇▇▇▇, APC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
10.9 GOVERNING LAW. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of California
applicable to contracts made and to be performed entirely in California.
10.10 SCHEDULES AND EXHIBITS. All schedules and exhibits are an
integral part of this Agreement.
10.11 LITIGATION COSTS. If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party or
parties therein shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
10.12 FINAL AGREEMENT. This Agreement constitutes the only
agreement of the parties concerning the matters herein, and supersedes,
merges and renders void all prior written/oral, and/or contemporaneous
agreements and understandings related thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the respective Closing dates.
(SIGNATURES FOLLOW ON NEXT PAGE)
16.
SIGNATURE PAGE TO COMMON STOCK AND
WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT
ASK JEEVES, INC.
a California corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
President and CEO
INITIAL PURCHASERS
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇ ▇▇▇▇▇▇
WITH RESPECT TO ARTICLES VIII AND X:
THE RODA GROUP VENTURE DEVELOPMENT COMPANY, LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
(Signature)
Chairman
-------------------------------------
(Print Name and Title)
WITH RESPECT TO ARTICLES IX AND X:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
17.
EXHIBIT A
WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN
TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN
CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION
WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR
THE. CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AND PURCHASED PURSUANT TO
THE TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN AUGUST __, 1997 COMMON
STOCK AND WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT BETWEEN THE
ORIGINAL HOLDER HEREOF AND THE COMPANY.
No. Series 97-FIELD(1) FIELD(2) Shares
WARRANT TO PURCHASE COMMON STOCK
ASK JEEVES, INC., a California corporation (the "Corporation"),
hereby grants to FIELD(3) (the "Holder"), the right to purchase from the
Corporation FIELD(4) shares of the common stock of the Corporation (the
"Warrant Shares"), subject to the terms and conditions set forth below. This
Warrant is one of a series of Warrants issued in connection with and pursuant
to the terms and conditions set forth in a August ___, 1997, Common Stock And
Warrant To Purchase Common Stock Purchase Agreement entered into between the
original Holder hereof and the Corporation.
1. TERM. This Warrant may be exercised, as set forth in Section
3, at any time through February __, 1998 (the "Exercise Period"), unless
extended as provided in the following sentence. For each $250,000 of
additional equity financing that the Holder is directly responsible for
introducing to the Company, and for which the Company in its sole discretion
accepts prior to the expiration of the Exercise Period, the term of this
Warrant shall be extended for an additional six month period, but in no event
shall such Exercise Period extend beyond August __, 1999.
2. PURCHASE PRICE. The purchase price for each share of the
Corporation's common stock purchasable hereunder shall be $_______ (subject
to adjustments for stock splits, combinations and the like).
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole
or in part, but not for less than Ten Thousand (10,000) Warrant Shares (or
such lesser number of Warrant Shares as may at the time of exercise
constitute the maximum number exercisable) and in excess of 10,000 Warrant
Shares in increments of 1,000 Warrant Shares. It is exercisable, subject to
the
18.
satisfaction of applicable securities laws, at any time during the Exercise
Period by the surrender of the Warrant to the Corporation at its principal
office together with the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, accompanied by payment in full of the
amount of the aggregate Exercise Price of the Warrant Shares in immediately
available funds.
4. FRACTIONAL INTEREST. The Corporation shall not be required
to issue any fractional shares on the exercise of this Warrant.
5. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. The Holder shall
not have any rights as a shareholder of the Corporation with regard to the
Warrant Shares prior to actual exercise resulting in the purchase of the
Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither this Warrant nor the
Warrant Shares issuable upon the exercise of this Warrant have been
registered under the Securities Act of 1933, or any state securities laws.
The Holder acknowledges by acceptance of the Warrant that as of the date of
this Warrant and at the time of exercise (a) he has acquired this Warrant or
the Warrant Shares, as the case may be, for investment and not with a view to
distribution; and either (b) he has a pre-existing personal or business
relationship with the Corporation, or its executive officers, or by reason of
his business or financial experience he has the capacity to protect his own
interests in connection with the transaction; and (c) he is an accredited
investor as that term is defined in Regulation D promulgated under the
Securities Act. The Holder agrees that any Warrant Shares issuable upon
exercise of this Warrant will be acquired for investment and not with a view
to distribution and such Warrant Shares will not be registered under the
Securities Act and applicable state securities laws and that such Warrant
Shares may have to be held indefinitely unless they are subsequently
registered or qualified under the Securities Act and applicable state
securities laws or, based on an opinion of counsel reasonably satisfactory to
the Corporation, an exemption from such registration and qualification is
available. The Holder, by acceptance hereof, consents to the placement of
the following restrictive legends, or substantially similar legends, on each
certificate to be issued to the Holder by the Corporation in connection with
the issuance of such Warrant Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR
LAWS COVERING SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE LAW.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME, NOT TO EXCEED ONE
19.
HUNDRED EIGHTY (180) DAYS FROM THE EFFECTIVE DATE OF THE CORPORATION'S FIRST
UNDERWRITTEN PUBLIC OFFERING.
7. RESERVATION OF SHARES. The Corporation agrees at all times
during the Exercise Period to have authorized and reserved, for the exclusive
purpose of issuance and delivery upon exercise of this Warrant, a sufficient
number of shares of its common stock to provide for the exercise of the
rights represented hereby.
8. ADJUSTMENT FOR RE-CLASSIFICATION OF CAPITAL STOCK. If the
Corporation at any time during the Exercise Period shall, by subdivision,
combination or re-classification of securities, change any of the securities
to which purchase rights under this Warrant exist under the same or different
number of securities of any class or classes, this Warrant shall thereafter
entitle the Holder to acquire such number and kind of securities as would
have been issuable as a result of such change with respect to the Warrant
Shares immediately prior to such subdivision, combination, or
re-classification. If shares of the Corporation's common stock are
subdivided into a greater number of shares of common stock, the purchase
price for the Warrant Shares upon exercise of this Warrant shall be
proportionately reduced and the Warrant Shares shall be proportionately
increased; and conversely, if shares of the Corporation's common stock are
combined into a smaller number of common stock shares, the price shall be
proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. PUBLIC OFFERING LOCK-UP. In connection with the first
underwritten registration of the Corporation's securities, the Holder agrees,
upon the request of the Corporation and the underwriters managing such
underwritten offering of the Corporation's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any Warrant Shares (other than those included in the registration)
without the prior written consent of the Corporation and such underwriters,
as the case may be, for such period of time, not to exceed one hundred eighty
(180) days, from the effective date of such registration as the underwriters
may specify. The Corporation and underwriters may request such additional
written agreements in furtherance of such standoff in the form reasonably
satisfactory to the Corporation and such underwriter. The Corporation may
also impose stop-transfer instructions with respect to the shares subject to
the foregoing restrictions until the end of said one hundred eighty (180) day
period.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon
receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Warrant or stock certificate,
and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Corporation of
all reasonable expenses incidental thereto, and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the
Corporation will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of this Warrant or stock
certificate.
11. ASSIGNMENT. With respect to any offer, sale or other
disposition of this Warrant or any underlying securities, the Holder will
give written notice to the Corporation prior thereto, describing briefly the
manner thereof, together with a written opinion of such Holder's counsel, to
the effect that such offer, sale or other distribution may be effected
without registration or
20.
qualification (under any applicable federal or state law then in effect).
Furthermore, no Such transfer shall be made unless the transferee meets the
same investor suitability standards set forth in Section 6 of this Warrant.
Promptly upon receiving such written notice and reasonably satisfactory
opinion, if so requested, the Corporation, as promptly as practicable, shall
notify such Holder that such Holder may sell or otherwise dispose of this
Warrant or the underlying securities, as the case may be, all in accordance
with the terms of the written notice delivered to the Corporation. If a
determination has been made pursuant to this Section I 1 that the opinion of
counsel for the Holder is not reasonably satisfactory to the Corporation, the
Corporation shall so notify the Holder promptly after such determination has
been made. Each Warrant thus transferred shall bear the same legends
appearing on this Warrant, and underlying securities thus transferred shall
bear the legends required by Section 6. The Corporation may issue stop
transfer instructions to its transfer agent in connection with such
restrictions. Warrants and underlying securities issued upon transfers after
the expiration date of the Lock-Up Period shall be issued without the Lock-Up
Legend.
12. GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of California applicable
to contracts between Colorado residents entered into and to be performed
entirely within the State of California.
13. AMENDMENTS. Any term of this Warrant may be amended with the
written consent of the Company and the holders of warrants representing not
less than a majority in interest (50% +) of the shares of Common Stock
issuable upon exercise of the outstanding Series 97 Warrants.
14. NOTICES. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified by hand
or professional courier service or five (5) days after deposit with the
United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address indicated for such
party in the Corporation's records, or at such other address as such party
may designate by ten (10) days' advance written notice to the other parties.
15. ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Warrant, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
disbursements in addition to any other relief to which such party may be
entitled.
Dated: August __, 1997 ASK JEEVES, INC.
By:
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, President & CEO
21.
NOTICE OF EXERCISE
To: ASK JEEVES, INC.
(1) The undersigned hereby elects to purchase _______ shares of
Common Stock of Ask Jeeves, Inc., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price for such shares
in full.
(2) In exercising this Warrant, the undersigned hereby confirms
and acknowledges that the shares of Common Stock are being acquired solely
for the account of the undersigned and not as a nominee for any other party,
or for investment, and that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under circumstances that
will not result in a violation of the Securities Act of 1933, as amended, or
any state securities laws.
(3) Please issue a certificate representing said shares of Common
Stock in the name of the undersigned:
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
------------------------------------
(Name)
--------------------- ------------------------------------
(Date) (Signature)
22.
SCHEDULE 1
DOLLAR NUMBER OF CLOSING
PURCHASER AMOUNT SHARES DATE ADDRESS
▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 83,334 120,390 8-20-97 Initial Closing
▇▇▇ ▇▇▇▇▇▇ $ 83,333 120,388 8-20-97 Initial Closing
▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 83,333 120,388 Not later than 30 days
after Initial Closing
(the "Second Closing")
▇▇▇ ▇▇▇▇▇▇ $ 83,334 120,390 Not later than 30 days
after Initial Closing
(the "Second Closing")
▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 83,333 120,388 Not later than 60 days
after Initial Closing
(the "Third Closing")
▇▇▇ ▇▇▇▇▇▇ $ 83,333 120,388 Not later than 60 days
after Initial Closing
(the "Third Closing")
23.
Schedule 5 to the Ask Jeeves, Inc.
Common Stock and Warrant to Purchase Common Stock
Purchase Agreement
The disclosures and exceptions set forth on this Schedule 5 to the
Corporation's warranties and representations shall be deemed to qualify all
applicable representations and warranties under this Agreement whether or not
specifically cross-referenced as pertaining to a specific section, warranty
or representation in the Agreement or any other agreement or exhibit
referenced therein.
SECTION 5.2 CORPORATE CAPITALIZATION.
OUTSTANDING OPTIONS
▇▇▇▇▇ ▇▇▇▇▇▇▇ 8,334
▇▇▇▇ ▇▇▇▇▇▇▇ 50,000
▇▇▇▇▇▇ Childs 10,000
▇▇▇▇ ▇▇▇▇▇ 20,000
▇▇▇▇▇▇ ▇▇▇▇ 3,500
SECTION 5.5 PATENTS AND OTHER INTANGIBLE RIGHTS
LIST OF SOFTWARE
ASKJEEVES.EXE
QMATCH.DLL
COMPILER.EXE
VALIDATOR.EXE
PKGEDIT.EXE
CLIENT.EXE
The knowledgebase contained in Jeeves.MDB
LIST OF TRADEMARKS
Notwithstanding the representations and warranties set forth in
Section 5.5 of the Agreement, the Corporation is in the process
of registering the trademark "ASK JEEVES" and the trademark
identified on Attachment 5.5 to this Schedule 5.
SECTION 5.9 MATERIAL LICENSES, AGREEMENTS, RELATED PARTY AGREEMENTS.
1. Agreement for Ask Jeeves to Purchase Equipment from
Desktop Software, dated August 15, 1997.
2. Linguistic System Licensing agreement with Proximity
Technology, Inc., dated November 22, 1996, for a term
of two years.
24.
3. Nondisclosure And Secrecy Agreement, dated as of
March 17, 1997, by and between the Corporation and
DynaNet, Inc, a California corporation.
4. Confidential Disclosure Agreement, dated as of April 9,
1997, by and between the Corporation and DynaNet, Inc,
a California corporation.
SECTION 5.10 FINANCIAL STATEMENTS.
Statement of Assets, Liabilities and Equity - Income Tax Basis
July 31, 1997; Statement of Revenue and Expenses - Income Tax
Basis July 31, 1997; Subsidiary Schedules Period Ended July 31,
1997; Compilation Report of Rose ▇.▇. ▇▇▇▇, Certified Public
Accountant, dated August 14, 1997; the General Ledger For Ask
Jeeves, Inc. Period Ended July 31, 1997 (the foregoing
collectively, the "Financial Statements").
25.