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EXHIBIT 10.4
ADKNOWLEDGE INC.
SERIES E PREFERRED
STOCK PURCHASE AGREEMENT
February 10, 1999
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TABLE OF CONTENTS
PAGE
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1. Purchase And Sale Of Stock...........................................................................1
1.1 Sale and Issuance of Series E Preferred Stock...................................................1
1.2 Closings........................................................................................1
2. Representations and Warranties of the Company........................................................2
2.1 Organization, Good Standing and Qualification...................................................2
2.2 Capitalization and Voting Rights................................................................2
2.3 Subsidiaries....................................................................................3
2.4 Authorization...................................................................................3
2.5 Valid Issuance of Series E Preferred Stock......................................................4
2.6 Governmental Consents...........................................................................4
2.7 Offering........................................................................................4
2.8 Litigation......................................................................................4
2.9 Proprietary Information.........................................................................5
2.10 Patents and Trademarks..........................................................................5
2.11 Compliance with Other Instruments...............................................................5
2.12 Agreements......................................................................................6
2.13 Related-Party Transactions......................................................................6
2.14 Registration Rights.............................................................................7
2.15 Corporate Documents.............................................................................7
2.16 Title to Property and Assets....................................................................7
2.17 Employee Benefit Plans..........................................................................7
2.18 Insurance.......................................................................................7
2.19 Employment Matters..............................................................................7
2.20 Small Business Concern..........................................................................8
2.21 Disclosure......................................................................................8
2.22 Taxes...........................................................................................8
2.23 Stock Issuances to Founders and Employees.......................................................8
2.24 Financial Statements............................................................................9
2.25 Changes in Conditions...........................................................................9
2.26 Environmental and Safety Laws...................................................................9
2.27 Customers and Suppliers.........................................................................9
2.28 Year 2000 Problem..............................................................................10
3. Representations and Warranties of the Investors.....................................................10
3.1 Authorization..................................................................................10
3.2 Purchase Entirely for Own Account..............................................................10
3.3 Disclosure of Information......................................................................11
3.4 Investment Experience..........................................................................11
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3.5 Restricted Securities..........................................................................11
3.6 Further Limitations on Disposition.............................................................11
3.7 Legends........................................................................................12
3.8 Further Representations by Foreign Investors...................................................12
4. California Commissioner of Corporations.............................................................12
4.1 Corporate Securities Law.......................................................................12
5. Conditions of Investors' Obligations at Each Closing................................................13
5.1 Representations and Warranties.................................................................13
5.2 Performance....................................................................................13
5.3 Compliance Certificate.........................................................................13
5.4 Qualifications.................................................................................13
5.5 Board of Directors.............................................................................13
5.6 Restated Articles..............................................................................13
5.7 Amended and Restated Investor Rights Agreement.................................................14
5.8 Amended and Restated Co-Sale Agreement.........................................................14
5.9 Voting Agreement...............................................................................14
5.10 Opinion of Company Counsel.....................................................................14
5.11 Consent and Waivers............................................................................14
5.12 Total Proceeds.................................................................................14
5.13 Other Fees and Expenses........................................................................14
5.14 SBA............................................................................................14
5.15 Proceedings and Documents......................................................................15
6. Conditions of the Company's Obligations at Each Closing.............................................15
6.1 Representations and Warranties.................................................................15
6.2 Payment of Purchase Price......................................................................15
6.3 Performance....................................................................................15
6.4 Qualifications.................................................................................15
6.5 Restated Articles..............................................................................15
6.6 Amended and Restated Investor Rights Agreement.................................................15
6.7 Amended and Restated Co-Sale Agreement.........................................................16
7. Miscellaneous.......................................................................................16
7.1 Survival of Warranties.........................................................................16
7.2 Successors and Assigns.........................................................................16
7.3 Governing Law..................................................................................16
7.4 Counterparts...................................................................................16
7.5 Titles and Subtitles...........................................................................16
7.6 Notices........................................................................................16
7.7 Finder's Fee...................................................................................17
7.8 Use of Proceeds................................................................................17
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7.9 Expenses.......................................................................................17
7.10 Amendments and Waivers.........................................................................17
7.11 Severability...................................................................................18
7.12 Aggregation of Stock...........................................................................18
7.13 Entire Agreement...............................................................................18
List of Schedules
Schedule A Schedule of Investors
Schedule B Schedule of Exceptions
List of Exhibits
Exhibit A Amended and Restated Articles of Incorporation
Exhibit B Amended and Restated Investor Rights Agreements
Exhibit C Amended and Restated Co-Sale Agreement
Exhibit D Voting Agreement
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SERIES E PREFERRED
STOCK PURCHASE AGREEMENT
This Series E Preferred Stock Purchase Agreement (the "Agreement") is
made this 10th day of February, 1999 by and among AdKnowledge Inc., a California
corporation (the "Company"), and the investors listed on the Schedule of
Investors attached hereto as Schedule A, each of which is herein referred to as
an "Investor."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase And Sale Of Stock.
1.1 Sale and Issuance of Series E Preferred Stock.
(a) The Company shall adopt and file with the
Secretary of State of the State of California on or before the First Closing (as
defined below) the Amended and Restated Articles of Incorporation in the form
attached hereto as Exhibit A (the "Restated Articles").
(b) Subject to the terms and conditions of this
Agreement, each Investor agrees, severally, to purchase at each Closing (as
defined below) and the Company agrees to sell and issue to each Investor at each
Closing that number of shares of the Company's Series E Preferred Stock set
forth opposite each Investor's name on Schedule A thereto under the headings
"First Closing" and "Second Closing," respectively, for the purchase price set
forth thereon.
1.2 Closings.
(a) The first purchase and sale of the Series E
Preferred Stock shall take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00 p.m.
on February 10, 1999, or at such other time and place as the Company and the
Investors acquiring in the aggregate more than half the shares of Series E
Preferred Stock being sold pursuant to this Agreement shall mutually agree upon
orally or in writing (the "First Closing").
(b) The second purchase and sale of the Series E
Preferred Stock will take place no later than 1:00 p.m. on February 10, 1999,
and at such time and place as the Company and Investors acquiring in the
aggregate more than half the shares of Series E Preferred Stock sold pursuant
hereto shall mutually agree in writing (the "Second Closing" and collectively
with the First Closing, a "Closing").
(c) At each Closing, the Company shall deliver to
each Investor a certificate representing the shares of Series E Preferred Stock
that such Investor is purchasing against payment of the purchase price therefor
by check, wire transfer, cancellation of indebtedness or any combination
thereof. In the event that payment by an Investor is made, in whole or in part,
by cancellation of indebtedness, then such Investor shall surrender to the
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Company for cancellation at such Closing any evidence of such indebtedness or
shall execute an instrument of cancellation in form and substance acceptable to
the Company.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor, except as set forth on a Schedule of
Exceptions (the "Schedule of Exceptions") attached hereto as Schedule B, which
exceptions shall be deemed to be representations and warranties as if made
hereunder, the following (for purposes of Sections 2.6 through 2.28, references
to the "Company" shall include the Company and any predecessors and subsidiaries
of the Company):
2.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a material adverse effect on its
business or properties. The Company has the requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted and possesses all governmental and
other permits, licenses and other authorizations to own its properties as now
owned and to carry on its business as presently conducted and as proposed to be
conducted. The Company has made available to each Investor or its special
counsel true, correct and complete copies of the Company's Articles of
Incorporation and Bylaws, each as amended to date.
2.2 Capitalization and Voting Rights. Assuming the filing of
the Restated Articles and the consummation of the transactions contemplated
herein, the authorized capital of the Company consists, or will consist as of
the First Closing, of:
(a) Preferred Stock. 40,520,478 shares of Preferred
Stock (the "Preferred Stock"), of which 525,000 shares have been designated
Series A Preferred Stock (the "Series A Preferred Stock"), all of which shall be
issued and outstanding, 5,512,000 shares have been designated Series B Preferred
Stock (the "Series B Preferred Stock"), all of which shall be issued and
outstanding, 576,192 shares have been designated Series C-1 Preferred Stock (the
"Series C-1 Preferred Stock"), 569,525 of which shall be issued and outstanding,
615,016 shares have been designated Series C-2 Preferred Stock (the "Series C-2
Preferred Stock"), 605,122 of which shall be issued and outstanding, 2,442,366
shares have been designated Series C-3 Preferred Stock (the "Series C-3
Preferred Stock"), 2,282,730 of which shall be issued and outstanding,
15,138,784 shares have been designated Series D Preferred Stock (the "Series D
Preferred Stock"), 14,432,618 of which shall be issued and outstanding, and
15,711,120 shares have been designated Series E Preferred Stock ("Series E
Preferred Stock"), up to 15,555,557 of which may be sold pursuant to this
Agreement. The rights, privileges and preferences of the Series A, Series B,
Series C-1, Series C-2, Series C-3, Series D and Series E Preferred Stock will
be as stated in the Company's Restated Articles.
(b) Common Stock. 55,479,522 shares of common stock
("Common Stock"), of which 6,174,563 shares shall be issued and outstanding.
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(c) Except for (A) the conversion privileges of the
Series A, Series B, Series C-1, Series C-2, Series C-3, Series D and Series E
Preferred Stock, (B) the rights of first offer provided in Paragraph 2.6 of the
Amended and Restated Investor Rights Agreement of even date herewith in the form
attached hereto as Exhibit B, by and among the Company and certain investors
(the "Amended and Restated Investor Rights Agreement"), (C) a total of 7,159,632
shares of Common Stock have been reserved for issuance, either directly or
through options, to employees, directors and consultants to the Company, of
which 4,884,977 shares of Common Stock are currently committed to employees of
the Company pursuant to outstanding options, (D) warrants to purchase 6,667
shares of Series C-1 Preferred Stock, (E) warrants to purchase 9,894 shares of
Series C-2 Preferred Stock, (F) warrants to purchase 159,636 shares of Series
C-3 Preferred Stock, (G) warrants to purchase 706,166 shares of Series D
Preferred Stock and (H) warrants to purchase 55,555 shares of Series E Preferred
Stock which may be issued after the Closings, there are not outstanding any
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. Except as provided in the Restated Articles, the Company is not a
party or subject to any agreement or understanding, and, to the Company's
knowledge, there is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity. The Company is not a participant in any
joint venture, partnership or similar arrangement.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Amended and
Restated Investor Rights Agreement, the Amended and Restated Co-Sale Agreement
(attached hereto as Exhibit C) (the "Amended and Restated Co-Sale Agreement"),
and the Voting Agreement (attached hereto as Exhibit D) (the "Voting Agreement")
and any other agreement to which the Company is a party the execution and
delivery of which is contemplated hereby (collectively referred to hereafter as
the "Ancillary Agreements"), the performance of all obligations of the Company
hereunder and thereunder, and the authorization, issuance (or reservation for
issuance), sale and delivery of the Series E Preferred Stock being sold
hereunder and the Common Stock issuable upon any conversion of the Series E
Preferred Stock as provided in the Restated Articles has been taken or will be
taken prior to the First Closing, and this Agreement and all of the Ancillary
Agreements constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Amended and Restated Investor Rights
Agreement may be limited by applicable federal or state securities laws.
2.5 Valid Issuance of Series E Preferred Stock. The Series E
Preferred Stock that is being purchased by the Investors hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly
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and validly issued, fully paid and nonassessable, and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement, the Amended and Restated Investor Rights Agreement and under
applicable state and federal securities laws. The Common Stock issuable upon
conversion of the Series E Preferred Stock purchased under this Agreement has
been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Restated Articles, will be duly and validly issued, fully
paid and nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Amended and Restated Investor
Rights Agreement and under applicable state and federal securities laws. No
shareholder of the Company has any right of first refusal or any preemptive
rights in connection with the issuance and sale of the Series E Preferred Stock.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for the filing pursuant to Section
25102(f) of the California Corporate Securities Law of 1968, as amended, and the
rules thereunder, which filing will be effected within fifteen (15) days of the
sale of the Series E Preferred Stock hereunder.
2.7 Offering. Subject in part to the truth and accuracy of
each Investor's representations set forth in Section 3 of this Agreement, (i)
the offer, sale and issuance of the Series E Preferred Stock as contemplated by
this Agreement are exempt from the registration requirements of the Act, and
neither the Company nor any authorized agent acting on its behalf will take any
action hereafter that would cause the loss of such exemption and (ii) the Series
E Preferred Stock that is being purchased by the Investors hereunder will be
issued in compliance with all applicable federal and state securities laws.
2.8 Litigation. There is no action, suit, proceeding or
investigation pending or, to the best of the Company's knowledge, currently
threatened against the Company that questions the validity of this Agreement,
the Ancillary Agreements or the right of the Company to enter into such
agreements, or to consummate the transactions contemplated hereby or thereby, or
that might result, either individually or in the aggregate, in any material
adverse changes in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company, nor is the Company aware that there is any basis for the foregoing. The
foregoing includes, without limitation, actions, suits, proceedings or
investigations pending or threatened (on any basis known to the Company)
involving the prior employment of any employees of the Company, 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. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or that the Company
intends to initiate.
2.9 Proprietary Information. Each current and former employee,
officer and consultant of the Company has executed a Proprietary Information and
Inventions
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Agreement in substantially the form provided to the Investors. The Company is
not aware that any of its employees, officers or consultants are in violation of
such agreements.
2.10 Patents and Trademarks. The Company has sufficient
license, title or ownership of all trademarks, service marks, trade names and
copyrights, and to its knowledge, the Company has sufficient license, title or
ownership of all patents necessary for its business as now conducted without any
conflict with or infringement of the rights of others. The Company is not aware
of and has not received any communications alleging that the Company has
violated any of the patents, trademarks, service marks, trade names or
copyrights of any other person or entity. The Company is not aware that any of
its employees is obligated under or in violation of any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of such employees' best efforts to promote the
interests of the Company or that would conflict with the business of the Company
as now conducted or proposed to be conducted. Except for inventions that may be
licensed by the Company without charge, the Company does not believe that it is
or will be necessary to utilize any inventions of any of its employees (or
people it currently intends to hire) made prior to their employment by the
Company.
2.11 Compliance with Other Instruments. The Company is not in
violation or default in any material respect of any provision of its Restated
Articles or Bylaws, or in any material respect of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound
or, to its knowledge, of any provision of any federal or state statute, rule or
regulation applicable to the Company. The execution, delivery and performance of
this Agreement, the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event that results
in the creation of any material lien, charge or encumbrance upon any assets of
the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal
of any material permit, license, authorization, or approval applicable to the
Company, its business or operations or any of its assets or properties, which
would have a material adverse effect on the Company.
2.12 Agreements.
(a) There are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees to which the Company is a party or by which it is bound that may involve
(i) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company, other than agreements entered into by the Company
in the ordinary course of business; (ii) provisions restricting or affecting the
development, manufacture or distribution of the Company's products or services,
or (iii) indemnification by the Company with respect to infringement of
proprietary rights.
(b) Except for agreements explicitly contemplated
hereby and by the Ancillary Agreements, there are no agreements, understandings
or proposed transactions between the Company and any of its officers, directors,
affiliates, or any affiliate thereof.
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(c) The Schedule of Exceptions contains a list of all
agreements of the Company that involves current obligations, or would reasonably
involve future obligations, of the Company or any other party thereto in excess
of $150,000 per annum or the loss of which would otherwise have a material
adverse effect on the business of the Company.
(d) The Company has not (i) declared or paid any
dividends or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness, for money
borrowed or any other liabilities, which is currently outstanding, individually
in excess of $50,000 or, in the case of outstanding indebtedness and/or
liabilities individually less than $50,000, in excess of $100,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(e) For the purposes of subsections (c) and (d)
above, all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual minimum
dollar amounts of such subsections.
(f) The Company is not a party to and is not bound by
any contract, agreement or instrument, or subject to any restriction under its
Restated Articles or Bylaws that adversely affects its business, its properties
or its financial condition as now conducted or as proposed to be conducted.
2.13 Related-Party Transactions. No employee, officer or
director of the Company, or member of his or her immediate family, is indebted
to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation that competes
with the Company, except that employees, officers, or directors of the Company
and members of their immediate families may own stock in publicly traded
companies that may compete with the Company. No member of the immediate family
of any officer or director of the Company is directly or indirectly interested
in any material contract with the Company.
2.14 Registration Rights. Except as provided in the Amended
and Restated Investor Rights Agreement, the Company has not granted or agreed to
grant any registration rights, including piggyback rights, to any person or
entity.
2.15 Corporate Documents. The Restated Articles and Bylaws of
the Company are in the form provided to the Investors.
2.16 Title to Property and Assets. The Company has good and
marketable title to its property and assets free and clear of all mortgages,
liens, loans and encumbrances, except such encumbrances and liens that arise in
the ordinary course of business and do not materially impair the Company's
ownership or use of such property or assets. With
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respect to the property and assets it leases, the Company is in compliance with
such leases and, to the best of the Company's knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances. All of the Company's
properties and assets are, in all material respects, in good operating and
usable condition, subject to normal wear and tear.
2.17 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.
2.18 Insurance. The Company has in full force and effect
workers' compensation, fire, casualty, and liability insurance policies, with
extended coverage, and other insurance all in such amounts and covering such
risks as is reasonable and prudent in view of the business and operations of the
Company and in any event no less extensive than is customarily maintained by
companies of established reputation engaged in the same or similar businesses
and sufficient in amount (subject to reasonable deductibles) to allow it to
replace any of its properties that might be damaged or destroyed.
2.19 Employment Matters. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. Subject to
general principles related to wrongful termination of employees, the employment
of each officer and employee of the Company is terminable at the will of the
Company.
2.20 Small Business Concern. The Company, together with its
"affiliates" (as that term is defined in 13 C.F.R. Section 121.401), is a "small
business concern" within the meaning of the Small Business Investment Act of
1958, as amended, and the regulations promulgated thereunder, including 13
C.F.R. Section 121.301(c)(1). The information set forth in SBA Forms 480, 652
and Part A of 1031 prepared or furnished or to be furnished by the Company is
accurate and complete in all material respects. The Company is not an owner of
five percent (5%) or more of any lender which is a "Licensee" under the Small
Business Investment Act of 1958, as amended. No portion of the proceeds from the
sale of the Series E Preferred Stock has been or will be used for any purpose in
contravention of any of the provisions of Part 107 of Title 13 of the Code of
Federal Regulations.
2.21 Disclosure. To the Company's knowledge, neither this
Agreement, the Ancillary Agreements, nor any other statements or certificates
made or delivered in connection herewith or therewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading in light of the circumstances
under which they were made. The Company has fully provided each Investor with
all the information that such Investor has requested for deciding whether to
purchase the Series E Preferred Stock. To the Company's knowledge, there are no
facts which (individually or in the aggregate) materially adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
the Company that have not been set forth in this Agreement, the Exhibits hereto,
the Amended and Restated Investor Rights Agreement or the Amended and Restated
Co-Sale Agreement. To the extent any financial projections were prepared by
management of the Company, such projections were prepared in good faith and
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based upon assumptions that the Company believes are reasonable; however, the
Company does not warrant that it will achieve such financial projections.
2.22 Taxes. The Company has paid, or made provision for
payment of, all taxes which have or may have become due pursuant to income tax
returns required to be filed by it or pursuant to any assessment which has been
received by it and all such tax returns have been timely filed. No federal or
state income or sales tax return of the Company has been audited, no deficiency
assessment or proposed adjustment of the Company's United States income tax,
state or municipal taxes or sales taxes is pending and the Company has no
knowledge of any proposed liability for any tax to be imposed on its property or
assets. To the best of the Company's knowledge, all individuals who have
purchased shares of the Company's Common Stock have timely filed elections under
Section 83(b) of the Internal Revenue Code and any analogous provisions of
applicable state tax laws.
2.23 Stock Issuances to Founders and Employees. Prior
issuances of securities of the Company to founders and employees have been made
pursuant to stock purchase or stock option agreements that have been approved by
the Company's Board of Directors which provide for (i) vesting over a period of
at least forty-eight (48) months, (ii) no acceleration of vesting upon an
initial public offering or acquisition of the Company, and (iii) a right of
first refusal in favor of the Company in the event of certain transfers of
shares to third parties, and including a "market stand-off" provision
substantially similar to that set forth in Section 1.13 of the Amended and
Restated Investor Rights Agreement.
2.24 Financial Statements. The Company has provided to the
Investors or to their special counsel the unaudited balance sheet as of December
31, 1998 and statements of income and cash flow for the twelve-month period
ended December 31, 1998 of the Company (collectively referred to herein as the
"Financial Statements"). The Financial Statements (A) are complete and correct
in all material respects and have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis (except
that they do not contain footnotes and certain other statements required by
GAAP), (B) are in accordance with the books and records of the Company, and (C)
present fairly the financial condition of the Company at the date or dates
therein indicated and the results of operations for the periods therein
specified. Except as set forth in the Financial Statements, the Company has no
material known liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to December 31, 1998 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under GAAP to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
2.25 Changes in Conditions. Since December 31, 1998, there has
not been any change in the assets or liabilities of the Company from that
reflected in the Financial Statements except changes in the ordinary course of
business which have not been in the aggregate materially adverse to the Company.
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2.26 Environmental and Safety Laws. To the best of the
Company's knowledge, the Company is not in violation of any applicable statute,
law or regulation relating to the environment or occupational health and safety,
the violation of which would materially adversely affect the Company, and to the
best of the Company's knowledge, no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
2.27 Customers and Suppliers. Except as set forth in the
Schedule of Exceptions, no customer or supplier of the Company, the loss of
which would have a Material Adverse Effect on the Company, has notified the
Company of its intention to terminate its relationship with the Company.
2.28 Year 2000 Problem. The Company has (i) initiated a review
and assessment of all areas within its and each of its subsidiaries' business
and operations (including those materially affected by suppliers, vendors and
customers) that could be materially adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by the Company or
any of its subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving dates after December 31, 1999), (ii) used its
reasonable efforts to develop a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented in all material
respects that plan in accordance with that timetable. Based on the foregoing,
the Company believes that all computer applications that are material to its and
its subsidiaries' business and operations are reasonably expected on a timely
basis to be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 Compliant"), except to
the extent that a failure to do so could not reasonably be expected to have
Material Adverse Effect.
3. Representations and Warranties of the Investors. Each Investor,
severally and not jointly, hereby represents and warrants that:
3.1 Authorization. The Investor has full power and authority
to enter into this Agreement and the Ancillary Agreements, and each such
Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Amended and Restated Investor Rights Agreement may be limited
by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made
with such Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Series E Preferred Stock to be received by such
Investor and the Common Stock issuable upon conversion thereof (collectively,
the "Securities") will be acquired for investment for such Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
or disposing of the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or
9
14
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series E Preferred Stock. Such Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series E Preferred Stock and the business, properties, prospects and financial
condition of the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 hereto or the right
of the Investors to rely thereon.
3.4 Investment Experience. Such Investor acknowledges that it
is an investor in securities of companies in the development stage and that it
is able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series E
Preferred Stock. If other than an individual, Investor also represents it has
not been organized for the purpose of acquiring the Series E Preferred Stock.
3.5 Restricted Securities. Such Investor understands that the
securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.6 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, such Investor further agrees not
to make any disposition of all or any portion of the Securities unless:
(a) There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the Act and
(iii) except in the case of a sale under Rule 144, the transferee has agreed in
writing for the benefit of the Company to be bound by this Section 3 of this
Agreement, the Amended and Restated Investor Rights Agreement, the Amended and
Restated Co-Sale Agreement and the Voting Agreement provided and to the extent
this Section and such agreements are then applicable. The Company, however, will
not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
10
15
(c) Notwithstanding the provisions of paragraphs (a)
and (b) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by an Investor that is a partnership to a partner of
such partnership or a retired partner of such partnership who retires after the
date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to his or her
spouse or to the siblings, lineal descendants or ancestors of such partner or
his or her spouse if the transferee agrees in writing to be subject to the terms
hereof to the same extent as if he or she were an original Investor hereunder.
3.7 Legends. It is understood that the certificates evidencing
the Securities may bear one or all of the following legends:
(a) "These securities have not been registered under
the Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code, and
any other legend required by applicable state securities and blue sky laws.
3.8 Further Representations by Foreign Investors. If an
Investor is not a United States person, such Investor hereby represents that he
or she has satisfied himself or herself as to the full observance of the laws of
his or her jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Agreement, including (i) the legal requirements
within his jurisdiction for the purchase of the Securities, (ii) any foreign
exchange restrictions applicable to such purchase, (iii) any governmental or
other consents that may need to be obtained, and (iv) the income tax and other
tax consequences, if any, that may be relevant to the purchase, holding,
redemption, sale, or transfer of the Securities. Such Investor's subscription
and payment for, and his or her continued beneficial ownership of the
Securities, will not violate any applicable securities or other laws of his or
her jurisdiction.
4. California Commissioner of Corporations.
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
11
16
5. Conditions of Investors' Obligations at Each Closing. The
obligations of each Investor under subsection 1.1(b) of this Agreement are
subject to the fulfillment on or before the First Closing of each of the
following conditions:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
First Closing with the same effect as though such representations and warranties
had been made on and as of the date of such First Closing.
5.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the First
Closing. The Company's business and assets shall not have been adversely
affected in any material way prior to the First Closing.
5.3 Compliance Certificate. The President of the Company shall
deliver to each Investor at the First Closing a certificate stating that the
conditions specified in Sections 5.1, 5.2 and 5.11 have been fulfilled.
5.4 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the securities pursuant to this Agreement shall be duly obtained and
effective as of the First Closing.
5.5 Board of Directors. Effective upon the First Closing, the
directors of the Company shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, Philippe Cases and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
5.6 Restated Articles. The Restated Articles shall have been
duly adopted by the Company by all necessary corporate action of its Board of
Directors and shareholders, and shall have been duly filed with the Secretary of
State of the State of California and become legally effective.
5.7 Amended and Restated Investor Rights Agreement. The
Company, each other Investor and the holders of a majority in interest of the
Company's Series B, Series C-1, Series C-2, Series C-3 and Series D Preferred
Stock, voting together as a class, shall have entered into the Amended and
Restated Investor Rights Agreement in the form attached hereto as Exhibit B.
5.8 Amended and Restated Co-Sale Agreement. The Company, each
other Investor and each Shareholder (as defined therein) shall have entered into
the Amended and Restated Co-Sale Agreement in the form attached hereto as
Exhibit C.
5.9 Voting Agreement.
The Company and each other Series E Investor (as defined therein)
shall have entered into the Voting Agreement in the form attached hereto as
Exhibit D.
12
17
5.10 Opinion of Company Counsel. Each Investor shall have
received from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an
opinion, dated as of the First Closing in form and content satisfactory to
special counsel for the Investors.
5.11 Consent and Waivers. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement, the Amended and Restated Investor Rights Agreement or the
Amended and Restated Co-Sale Agreement), permits and waivers necessary or
appropriate for consummation of the transactions contemplated by this Agreement,
the Amended and Restated Investor Rights Agreement or the Amended and Restated
Co-Sale Agreement.
5.12 Total Proceeds. At least $11,000,000 in aggregate
proceeds to the Company shall have been subscribed for at the First Closing.
5.13 Other Fees and Expenses.
The Company shall have paid or reimbursed all fees and expenses that it
is required to reimburse as of the First Closing pursuant to Section 7.9 hereof.
5.14 SBA. The Company shall have provided each Investor that
is a Small Business Investment Company with such documentation and
certifications as shall be necessary to comply with the rules and regulations of
the Small Business Administration, including appropriate size status
declarations and assurance of compliance declarations.
5.15 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the First
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the Investors and
their special counsel, and the Investors and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
6. Conditions of the Company's Obligations at Each Closing. The
obligations of the Company to each Investor under this Agreement are subject to
the fulfillment on or before each Closing of each of the following conditions by
that Investor:
6.1 Representations and Warranties. The representations and
warranties of the Investors contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the First Closing.
6.2 Payment of Purchase Price. Each Investor shall have
delivered the purchase price specified in Section 1.1(b).
6.3 Performance. Each Investor shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by the Investors on
or before the Closing.
13
18
6.4 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.
6.5 Restated Articles. The Restated Articles shall have been
duly adopted by the Company's shareholders, and shall have been duly filed with
the Secretary of State of the State of California and become legally effective.
6.6 Amended and Restated Investor Rights Agreement. Each
Investor and the holders of a majority in interest of the Company's Series B,
Series C-1, Series C-2, Series C-3 and Series D Preferred Stock, voting together
as a class, shall have entered into the Amended and Restated Investor Rights
Agreement in the form attached hereto as Exhibit B.
6.7 Amended and Restated Co-Sale Agreement. Each Investor and
Shareholder (as defined therein) shall have entered into the Amended and
Restated Co-Sale Agreement in the form attached hereto as Exhibit C.
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations
and covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closings and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
7.2 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given to the party so notified in
writing and shall be deemed effectively given upon personal delivery, upon
delivery by confirmed facsimile or
14
19
electronic transmission (with duplicate original sent by United States mail) or
three business 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 on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
7.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless each Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
7.8 Use of Proceeds. The net proceeds to the Company at the
Closings shall be used for working capital, capital expenditures and the
retirement of existing debt. Any use of the net proceeds for an acquisition by
the Company of another corporate or similar entity shall require approval by the
Company's Board of Directors.
7.9 Expenses. Irrespective of whether the Closings are
effected, the Company and each Investor shall each pay their respective costs
and expenses incurred with respect to the negotiation, execution, delivery and
performance of this Agreement. If the First Closing is effected, the Company
shall reimburse the reasonable fees and expenses of special counsel for the
Investors plus reasonable expenses incurred by the Investors to perform due
diligence on the Company, such reimbursements not to exceed $50,000 in the
aggregate. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Ancillary Agreements or the Restated
Articles, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
7.10 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
E Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
7.11 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
15
20
7.12 Aggregation of Stock. All shares of the Preferred Stock
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
7.13 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
[Remainder of This Page Intentionally Left Blank]
16
21
IN WITNESS WHEREOF, the parties have executed this Series E Preferred
Stock Purchase Agreement as of the date first above written.
COMPANY: ADKNOWLEDGE INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FIRST CLOSING INVESTORS: SANDLER CAPITAL IV PARTNERS, L.P.
By: Sandler Capital Management, a General
Partner
By: MJDM Corp., a General Partner
By:_______________________________________
Name:_____________________________________
Title:____________________________________
SANDLER CAPITAL IV FTE PARTNERS, L.P.
By: Sandler Capital Management, a General
Partner
By: MJDM Corp., a General Partner
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: __________________________________________
__________________________________________
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
22
IN WITNESS WHEREOF, the parties have executed this Series E Preferred
Stock Purchase Agreement as of the date first above written.
COMPANY: ADKNOWLEDGE INC.
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FIRST CLOSING INVESTORS: SANDLER CAPITAL IV PARTNERS, L.P.
By: Sandler Capital Management, a General
Partner
By: MJDM Corp., a General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: President
-----------------------------------
SANDLER CAPITAL IV FTE PARTNERS, L.P.
By: Sandler Capital Management, a General
Partner
By: MJDM Corp., a General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: President
-----------------------------------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
23
▇▇▇▇▇▇▇▇ PARTNERS, L.P.
By: /s/ [Signature Illegible]
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address:
-----------------------------------------
-----------------------------------------
▇▇▇▇▇▇▇▇ FOREIGN PARTNERS, L.P.
By: /s/ [Signature Illegible]
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address:
-----------------------------------------
-----------------------------------------
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
24
▇▇▇▇▇▇-SBIC, L.P
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
General Partner
▇▇▇▇▇▇ TECHNOLOGY VENTURES II, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
General Partner
▇▇▇▇▇▇ EDB PARTNERS, L.P.
By: /s/ LIP-BU TAN
---------------------------------------
Lip-Bu Tan
General Partner
▇▇▇▇▇▇ JAPAN PARTNERS, L.P.
By: /s/ LIP-BU TAN
---------------------------------------
Lip-Bu Tan
General Partner
▇▇▇▇▇▇ MEDIA & INFORMATION TECHNOLOGY, L.P.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
25
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB INFORMATION SCIENCES ZAIBATSU FUND II
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB JAVA FUND
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB VIII FOUNDERS FUND
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address: c/o Kleiner ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
26
MULTINVEST LIMITED
By: /s/ PHILIPPE CASES
---------------------------------------
Philippe Cases
Atty-in-fact
PARTECH EUROPE PARTNERS III C.V.
By: /s/ PHILIPPE CASES
---------------------------------------
Name: Philippe Cases
-------------------------------------
Title: General Partner
------------------------------------
AXA U.S. GROWTH FUND LLC
By: /s/ PHILIPPE CASES
---------------------------------------
Name: Philippe Cases
-------------------------------------
Title: Member
------------------------------------
PARRALLEL CAPITAL I LLC
By: /s/ PHILIPPE CASES
---------------------------------------
Name: Philippe Cases
-------------------------------------
Title: Member
------------------------------------
45TH PARRALLEL
By: /s/ PHILIPPE CASES
---------------------------------------
Name: Philippe Cases
-------------------------------------
Title: Member
------------------------------------
Address: c/o Partech International
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
27
PARTECH U.S. PARTNERS III C.V.
By: /s/ PHILIPPE CASES
---------------------------------------
Philippe Cases
General Partner
PARVEST U.S. PARTNERS II C.V.
By: /s/ PHILIPPE CASES
---------------------------------------
Philippe Cases
Atty-in-fact
DOUBLE BLACK DIAMOND II LLC
By: /s/ PHILIPPE CASES
---------------------------------------
Philippe Cases
Atty-in-fact
ALMANORI LIMITED
By: /s/ PHILIPPE CASES
---------------------------------------
Philippe Cases
Atty-in-fact
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
28
TECHNO VII (A) LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TECHNO VII (B) LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TECHNO VIII LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: Partner
------------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
29
TECHNO VII (A) LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TECHNO VII (B) LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TECHNO VIII LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
▇▇▇▇▇▇▇ PHLEGER & ▇▇▇▇▇▇▇▇ LLP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
30
TECHNO VII (A) LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TECHNO VII (B) LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TECHNO VIII LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
▇▇▇▇▇▇▇ PHLEGER & ▇▇▇▇▇▇▇▇ LLP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
31
SECOND CLOSING INVESTORS: INFOTECH VENTURES LTD.
By: /s/ LIP-BU TAN
---------------------------------------
Name: Lip-Bu Tan
-------------------------------------
Title: Director
------------------------------------
O, W & W INVESTMENTS LTD.
By: /s/ LIP-BU TAN
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Name: Lip-Bu Tan
-------------------------------------
Title: Director
------------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO SERIES E PREFERRED
STOCK PURCHASE AGREEMENT]
32
SCHEDULE A
SCHEDULE OF INVESTORS
NUMBER OF SHARES AGGREGATE
OF SERIES E PURCHASE
INVESTORS PREFERRED STOCK PRICE
--------- --------------- -----
FIRST CLOSING
Sandler Capital IV Partners, L.P. 3,937,778 $3,544,000.20
Sandler Capital IV FTE Partners, L.P. 1,617,778 $1,456,000.20
▇▇▇▇▇▇▇▇ Partners, L.P. 2,048,658 $1,843,792.20
▇▇▇▇▇▇▇▇ Foreign Partners, L.P. 173,564 $156,207.60
▇▇▇▇▇▇-SBIC, L.P. 186,168 $167,551.20
▇▇▇▇▇▇ Technology Ventures II, L.P. 46,514 $41,862.60
▇▇▇▇▇▇ EDB Partners, L.P. 68,479 $61,631.10
▇▇▇▇▇▇ Japan Partners, L.P. 68,479 $61,631.10
▇▇▇▇▇▇ Media & Information Technology 618,304 $556,473.60
KPCB Java Fund 555,556 $500,000.40
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII 498,889 $449,000.10
KPCB Information Sciences Zaibatsu Fund II 27,778 $25,000.20
KPCB VIII Founders Fund 28,889 $26,000.10
Partech U.S. Partners III C.V. 1,444,444 $1,299,999.60
Partech Europe Partners III C.V. 444,444 $399,999.60
Parvest U.S. Partners II C.V. 222,222 $199,999.80
Axa U.S. Growth Fund LLC 1,000,000 $900,000.00
Parallel Capital I LLC 1,111,111 $999,999.90
45th Parallel 55,556 $50,000.40
Double Black Diamond II LLC 32,222 $28,999.80
Almanori Limited 15,556 $14,000.40
Multinvest Limited 7,778 $7,000.20
Techno VII(A) Limited Partnership 109,546 $98,591.40
Techno VII(B) Limited Partnership 500,783 $450,704.70
Techno VIII Limited Partnership 500,783 $450,704.70
▇▇▇▇▇▇▇ Phleger & ▇▇▇▇▇▇▇▇ LLP 80,000 $72,000.00
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 16,375 $14,737.50
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 7,368 $6,631.20
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 7,368 $6,631.20
---------- --------------
Subtotal:
SECOND CLOSING
InfoTech Ventures Ltd. 82,152 $73,936.80
O, W & W Investments Ltd. 41,015 $36,913.50
---------- --------------
Subtotal:
TOTALS: 15,555,557 $14,000,001.30
========== ==============
SCH-A
33
EXHIBIT A
Amended and Restated Articles of Incorporation
A-1
34
EXHIBIT B
Amended and Restated Investor Rights Agreements
B-1
35
EXHIBIT C
Amended and Restated Co-Sale Agreement
C-1
36
EXHIBIT D
Voting Agreement
D-1
37
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF ADKNOWLEDGE INC.
A CALIFORNIA CORPORATION
The undersigned ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. Finder hereby certify
that:
ONE: They are the President and Secretary, respectively, of
AdKnowledge Inc., a California corporation.
TWO: The Articles of Incorporation of this corporation are hereby
amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is AdKnowledge Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. Classes of Stock. This corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares of all classes of stock which the corporation shall have
authority to issue is 96,000,000 shares. The total number of shares of Common
Stock which the corporation is authorized to issue is 55,479,522. The total
number of shares of Preferred Stock which the corporation is authorized to issue
is 40,520,478, of which 525,000 shares shall be Series A Preferred Stock,
5,512,000 shares shall be Series B Preferred Stock, 576,192 shares shall be
Series C-1 Preferred Stock, 615,016 shares shall be Series C-2 Preferred Stock,
2,442,366 shares shall be Series C-3 Preferred Stock, 15,138,784 shares shall be
Series D Preferred Stock and 15,711,120 shares shall be Series E Preferred
Stock.
B. Rights, Preferences and Restrictions of the Preferred Stock. The rights,
preferences, privileges and restrictions granted to and imposed on the Preferred
Stock are as set forth below in this Article III(B).
1. Dividend Provisions.
(a) The holders of outstanding shares of Preferred Stock shall be
entitled to receive dividends at the rate of $0.01 per share per annum for the
Series A Preferred Stock, $0.03 per share per annum for the Series B Preferred
Stock, $0.05 per share per annum for the Series C-1 Preferred Stock, $0.21 per
share per annum for the Series C-2 Preferred Stock,
38
$0.12 per share per annum for the Series C-3 Preferred Stock, $0.04 per share
per annum for the Series D Preferred Stock, and $0.063 per share per annum for
the Series E Preferred Stock, out of any assets legally available therefor,
prior and in preference to any declaration or payment of any dividend (payable
other than in Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of this corporation) on the Common Stock of this
corporation payable when, as and if declared by the Board of Directors (the
"Board"). Such dividends shall not be cumulative. Declared but unpaid dividends
with respect to an outstanding share of Preferred Stock shall, upon conversion
of such share to Common Stock, be paid to the extent assets are legally
available therefor either in cash or in Common Stock (valued at the fair market
value on the date of payment as determined by the Board). Any amounts for which
such assets are not legally available shall be paid promptly as assets become
legally available therefor.
(b) After payment of any such dividends, any additional
dividends or distributions shall be distributed among all holders of Common
Stock and all holders of Preferred Stock in proportion to the number of shares
of Common Stock which would be held by each such holder if all outstanding
shares of Preferred Stock were converted to Common Stock at the then effective
conversion rate.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding
up of this corporation, either voluntary or involuntary, the holders of the
outstanding shares of Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the corporation to the
holders of Common Stock by reason of their ownership thereof, (i) for the Series
A Preferred Stock, an amount per share equal to $0.20 for each outstanding share
of Series A Preferred Stock, (ii) for the Series B Preferred Stock, an amount
per share equal to $0.4717 for each outstanding share of Series B Preferred
Stock, (iii) for the Series C-1 Preferred Stock, an amount per share equal to
$0.8451 for each outstanding share of Series C-1 Preferred Stock (the "Series
C-1 Liquidation Price"), (iv) for the Series C-2 Preferred Stock, an amount per
share equal to $3.2981 for each outstanding share of Series C-2 Preferred Stock
(the "Series C-2 Liquidation Price"), (v) for the Series C-3 Preferred Stock, an
amount per share equal to $1.9129 for each outstanding share of Series C-3
Preferred Stock (the "Series C-3 Liquidation Price"), (vi) for the Series D
Preferred Stock, an amount per share equal to $0.5543 for each outstanding share
of Series D Preferred Stock (the "Series D Liquidation Price") and (vii) for the
Series E Preferred Stock, an amount per share equal to $0.90 for each
outstanding share of Series E Preferred Stock (the "Series E Liquidation
Price"). If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the outstanding shares of Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, the entire assets and funds of the corporation
legally available for distribution shall be distributed ratably among the
holders of the outstanding shares of Preferred Stock in proportion to the
preferential amount each such holder is otherwise entitled to receive.
(b) Upon the completion of the distribution required by
subparagraph (a) of this Section 2, the remaining assets of the corporation
available for distribution to shareholders shall be distributed among the
holders of Preferred Stock and Common Stock pro rata based on the number of
shares of Common Stock held by each (assuming conversion of all
-2-
39
such outstanding shares of Preferred Stock) until, (i) with respect to the
holders of Series A Preferred Stock, such holders shall have received an
aggregate of $0.80 per share (including amounts paid pursuant to subsection (a)
of this Section 2), (ii) with respect to the holders of Series B Preferred
Stock, such holders shall have received an aggregate of $1.8868 per share
(including amounts paid pursuant to subsection (a) of this Section 2), (iii)
with respect to the holders of Series C-1 Preferred Stock, such holders shall
have received an aggregate of $3.3804 per share (including amounts paid pursuant
to subsection (a) of this Section 2), (iv) with respect to the holders of Series
C-2 Preferred Stock, such holders shall have received an aggregate of $13.1924
per share (including amounts paid pursuant to subsection (a) of this Section 2),
(v) with respect to the holders of Series C-3 Preferred Stock, such holders
shall have received an aggregate of $7.6516 per share (including amounts paid
pursuant to subsection (a) of this Section 2), (vi) with respect to the holders
of Series D Preferred Stock, such holders shall have received an aggregate of
$2.2172 per share (including amounts paid pursuant to subsection (a) of this
Section 2) and (vii) with respect to the holders of Series E Preferred Stock,
such holders shall have received an aggregate of $3.60 per share (including
amounts paid pursuant to subsection (a) of this Section 2); thereafter, if
assets remain in this corporation, the holders of the Common Stock of this
corporation shall receive all of the remaining assets of this corporation pro
rata based on the number of shares of Common Stock held by each.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of this corporation shall be deemed to be occasioned
by, or to include, (A) the acquisition of the corporation by another entity by
means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation but, excluding any
merger effected exclusively for the purpose of changing the domicile of the
corporation); or (B) a sale of all or substantially all of the assets of the
corporation; unless the corporation's shareholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
corporation's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration
received by the corporation is other than cash, its value will be deemed its
fair market value. Any securities shall be valued as follows:
(A) Securities not subject to an investment letter
or other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through NASDAQ-NMS, the value shall be deemed to be the average of the closing
prices of the securities on such exchange over the thirty-day period ending
three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days prior
to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
corporation and the holders
-3-
40
of at least a majority of the voting power of all then outstanding shares of
Preferred Stock, voting together as a single class.
(B) The method of valuation of securities
subject to investment letter or other restrictions on free marketability (other
than restrictions arising solely by virtue of a shareholder's status as an
affiliate or former affiliate) shall be to make an appropriate discount from the
market value determined as above in (A) (1), (2) or (3) to reflect the
approximate fair market value thereof, as mutually determined by the corporation
and the holders of at least a majority of the voting power of all then
outstanding shares of Preferred Stock, voting together as a single class.
(iii) In the event the requirements of this subsection
2(c) are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this subsection 2(c) have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of outstanding shares of
Preferred Stock shall revert to and be the same as such rights, preferences and
privileges existing immediately prior to the date of the first notice referred
to in subsection 2(c)(iv) hereof.
(iv) The corporation shall give each holder of record
of Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the corporation has given the first notice
provided for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of a majority
of the voting power of all then outstanding shares of Preferred Stock that are
entitled to such notice rights or similar notice rights, voting together as a
single class.
(v) The rights granted pursuant to this subsection 2(c)
are in addition to the rights granted pursuant to Section 5 herein.
3. Redemption. The Preferred Stock is not redeemable.
4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Effective
-4-
41
Issue Price (as defined below) for such series of Preferred Stock by the
Conversion Price applicable to such series, determined as hereafter provided, in
effect on the date the certificate is surrendered for conversion. The Effective
Issue Price for the Series A Preferred Stock shall be $0.20 per share; the
Effective Issue Price for the Series B Preferred Stock shall be $0.4717 per
share; the Effective Issue Price for the Series C-1 Preferred Stock and Series
C-2 Preferred Stock shall be $0.8451 per share; the Effective Issue Price for
the Series C-3 Preferred Stock shall be $1.9129 per share; the Effective Issue
Price for the Series D Preferred Stock shall be $0.5543 per share; and the
Effective Issue Price for the Series E Preferred Stock shall be $0.90 per share.
The initial Conversion Price per share for each series shall be the Effective
Issue Price for such series; provided, however, that the Conversion Price shall
be subject to adjustment as set forth in subsection 4(d).
(b) Automatic Conversion. Each share of Preferred Stock
shall automatically be converted into shares of Common Stock at the Conversion
Price at the time in effect for the respective series of Preferred Stock
immediately upon the earlier of (A) except as provided below in subsection 4(c),
the corporation's sale of its Common Stock in a firm commitment underwritten
public offering pursuant to a registration statement under the Securities Act of
1933, as amended, the public offering price of which was not less than $2.70 per
share (adjusted to reflect subsequent stock dividends, stock splits or
recapitalizations) and $10 million in the aggregate or (B) the date specified by
written consent or agreement of (i) the holders of at least a majority of the
then outstanding shares of Series A Preferred Stock, Series B Preferred Stock,
Series C-1 Preferred Stock, Series C-2 Preferred Stock, Series C-3 Preferred
Stock and Series D Preferred Stock, voting together as a single class and (ii)
the holders of at least 51% of the then outstanding shares of Series E Preferred
Stock.
(c) Mechanics of Conversion. Before any holder of Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of this corporation or of any transfer agent for such Preferred
Stock, and shall give written notice to this corporation at its principal
corporate office, of the election to convert the same and shall state therein
the name or names in which the certificate or certificates for shares of Common
Stock are to be issued. This corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred Stock,
or to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date. If the conversion is in connection with an underwritten offering
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering Preferred Stock for
conversion, be conditioned upon the closing with the underwriters of the sale of
securities pursuant to such offering, in which event the person(s) entitled to
receive the Common Stock upon conversion of such Preferred Stock shall not be
deemed to have converted such Preferred Stock until immediately prior to the
closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for
Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the
Series A, Series B,
-5-
42
Series C-1, Series C-2, Series C-3, Series D and Series E Preferred Stock shall
be subject to adjustment from time to time as follows:
(i) (A) (1) With respect to the issuance of any shares
of the Series D Preferred Stock only, if the corporation shall issue, or be
deemed to have issued, any shares of Series D Preferred Stock without
consideration or for a consideration per share less than the Conversion Price
for the Series A, Series B, Series C-1 and/or Series C-2 Preferred Stock in
effect immediately prior to the issuance of such shares of Series D Preferred
Stock, the Conversion Price of the Series A, Series B, Series C-1 and/or Series
C-2 Preferred Stock in effect immediately prior to each such issuance shall
forthwith (except as otherwise provided in this clause d(i)) be adjusted to a
price determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common Stock
that the aggregate consideration received by the corporation for such issuance
would purchase at such Conversion Price and the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of such Series D Preferred Stock.
(2) With respect to the issuance of any
shares of the Series D Preferred Stock only, if the corporation shall issue, or
be deemed to have issued, any shares of Series D Preferred Stock without
consideration or for a consideration per share less than the Conversion Price
for the Series C-3 Preferred Stock in effect immediately prior to the issuance
of such shares of Series D Preferred Stock, the Conversion Price for the Series
C-3 Preferred Stock in effect immediately prior to the each such issuance shall
forthwith (except as otherwise provided in this clause d(i)) be adjusted to a
price determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common Stock
that the aggregate consideration received by the corporation for such issuance
would purchase at such Conversion Price and the denominator of which shall be
the lesser of, or, if both such clauses are equal, then the denominator shall be
equal to, (I) the number of shares of Common Stock outstanding immediately prior
to such issuance plus the number of shares of such Series D Preferred Stock or
(II) the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock that the aggregate
consideration received by the corporation for such issuance would purchase at
twenty-five thirty-seconds (25/32) of the Effective Issue Price for the Series
C-3 Preferred Stock (adjusted solely for calculations under this clause
(d)(i)(A)(2) to reflect subsequent stock dividends, stock splits or
recapitalizations).
(3) Except with respect to the issuance, or
deemed issuance, of any shares of the Series D Preferred Stock (which is
provided for in the immediately preceding clauses d(i)(A)(1) and d(i)(A)(2)), if
the corporation shall issue, after the date upon which any shares of the Series
E Preferred Stock were first issued (the "Purchase Date"), any Additional Stock
(as defined below) without consideration or for a consideration per share less
than the Conversion Price for the Series A, Series B, Series C-1, Series C-2,
Series C-3, Series D and/or Series E Preferred Stock in effect immediately prior
to the issuance of such Additional Stock, the Conversion Price of the Series A,
Series B, Series C-1, Series C-2, Series C-3, Series D and/or Series E Preferred
Stock in effect immediately prior to each such issuance
-6-
43
shall forthwith (except as otherwise provided in this clause d(i)) be adjusted
to a price determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common Stock
that the aggregate consideration received by the corporation for such issuance
would purchase at such Conversion Price and the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of such Additional Stock.
(B) No adjustment of the Conversion Price for any
series of Preferred Stock shall be made in an amount less than one cent per
share, provided that any adjustments which are not required to be made by reason
of this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to 3 years from the date of the event
giving rise to the adjustment being carried forward, or shall be made at the end
of 3 years from the date of the event giving rise to the adjustment being
carried forward. Except to the limited extent provided for in subsections (E)(3)
and (E)(4), no adjustment of such Conversion Price pursuant to this subsection
4(d)(i) shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock
for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board irrespective of any accounting treatment.
(E) In the case of the issuance (whether before,
on or after the Purchase Date) of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities, the following provisions shall apply for all
purposes of this subsection 4(d)(i) and subsection 4(d)(ii):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of time,
but without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
subsections 4(d)(i)(C) and (d)(i)(D)), if any, received by the corporation upon
the issuance of such options or rights plus the minimum exercise price provided
in such options or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for (assuming the
satisfaction
-7-
44
of any conditions to convertibility or exchangeability, including, without
limitation, the passage of time, but without taking into account potential
antidilution adjustments) any such convertible or exchangeable securities or
upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a consideration equal to
the consideration, if any, received by the corporation for any such securities
and related options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional consideration, if
any, to be received by the corporation (without taking into account potential
antidilution adjustments) upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration in each case to
be determined in the manner provided in subsections 4(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the number
of shares of Common Stock deliverable or in the consideration payable to this
corporation upon exercise of such options or rights or upon conversion of or in
exchange for such convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Conversion Price of each series of Preferred Stock to the extent in any way
affected by or computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities.
(4) Upon the expiration of any such options
or rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price of each series of Preferred Stock, to the
extent in any way affected by or computed using such options, rights or
securities or options or rights related to such securities, shall be recomputed
to reflect the issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities which remain in effect) actually issued
upon the exercise of such options or rights, upon the conversion or exchange of
such securities or upon the exercise of the options or rights related to such
securities.
(5) The number of shares of Common Stock
deemed issued and the consideration deemed paid therefor pursuant to subsections
4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either subsection
4(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common
Stock, or any obligation to issue any share of stock or other security of the
corporation convertible into or exchangeable for Common Stock, issued (or deemed
to have been issued pursuant to subsection 4(d)(i)(E)) by this corporation after
the Purchase Date other than:
(A) Common Stock issued pursuant to a transaction
described in subsection 4(d)(iii) hereof;
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(B) shares of Common Stock issuable or issued to
employees, consultants, directors or vendors (if in transactions with primarily
non-financing purposes) of this corporation directly or pursuant to a stock
option plan or restricted stock plan approved by the Board at any time when the
total number of shares of Common Stock so issuable or issued (and not
repurchased at cost by the corporation in connection with the termination of
employment) does not exceed 8,042,060 (including 5,872,894 shares of Common
Stock issuable upon exercise of options outstanding as of the Purchase Date);
(C) Common Stock issued upon conversion of shares
of Preferred Stock;
(D) up to 100,000 shares of Common Stock issued to
banks or equipment lessors, provided such issuances are for other than primarily
equity financing purposes and are approved by the Board;
(E) up to 250,000 shares of Common Stock issued in
connection with business combinations or corporate partnering agreements
approved by the Board; and
(F) shares of Series D Preferred Stock.
(iii) In the event the corporation should at any time
or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend, distribution, split or subdivision if no record date is fixed),
the Conversion Price of each series of Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase in
the aggregate number of shares of Common Stock outstanding and those issuable
with respect to such Common Stock Equivalents.
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for each series of Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in the aggregate number of shares of Common Stock outstanding.
(e) Other Distributions. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4(d)(iii), then,
in each such case for the purpose of this subsection 4(e), the
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46
holders of Preferred Stock shall be entitled to a proportionate share of any
such distribution as though they were the holders of the number of shares of
Common Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2) provision shall be made so that the holders of
Preferred Stock shall thereafter be entitled to receive upon conversion of such
series of Preferred Stock the number of shares of stock or other securities or
property of the corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion of the Preferred Stock would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the rights
of the holders of Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the Conversion Price then
in effect and the number of shares issuable upon conversion of the Preferred
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.
(g) No Impairment. This corporation will not, by amendment
of its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of Preferred Stock and against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the
conversion of any share or shares of Preferred Stock, and the number of shares
of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of a series of Preferred Stock pursuant to
this Section 4, this corporation, at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of such Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This corporation shall, upon the written
request at any time of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such adjustment
and readjustment, (B) the Conversion Price for such series of Preferred Stock at
the time in effect, and (C) the number of shares of Common Stock and the
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amount, if any, of other property which at the time would be received upon the
conversion of such series of Preferred Stock.
(i) Notices of Record Date. In the event of any taking by
this corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Preferred Stock, at least 20 days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, this corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to these Articles of
Incorporation.
(k) Notices. Any notice required by the provisions of this
Section 4 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his or her address appearing on the books
of this corporation.
5. Voting Rights.
(a) The holder of each outstanding share of Preferred Stock
shall have the right to one vote for each share of Common Stock into which such
Preferred Stock could then be converted, and with respect to such vote, such
holder shall have full voting rights and powers equal to the voting rights and
powers of the holders of Common Stock and shall be entitled, notwithstanding any
provision hereof, to notice of any shareholders' meeting in accordance with the
bylaws of this corporation, and shall be entitled to vote, together with holders
of Common Stock, with respect to any question upon which holders of Common Stock
have the right to vote. Fractional votes shall not, however, be permitted and
any fractional voting rights available on an as-converted basis (after
aggregating all shares into which such outstanding shares of Preferred Stock
held by each holder could be converted) shall be rounded to the nearest whole
number (with one-half being rounded upward).
(b) Notwithstanding the provisions of Section 5(a) above, so
long as 2,650,000 shares of Series B Preferred Stock remain outstanding (as
adjusted for subsequent stock splits, recapitalizations and the like), the
holders of Series B Preferred Stock, voting as a
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separate class, shall be entitled to elect one (1) director of the corporation
(the "Series B Director"). At any meeting held for the purpose of electing or
nominating directors, the presence in person or by proxy of the holders of a
majority of the Series B Preferred Stock then outstanding shall constitute a
quorum of the Series B Preferred Stock for the election or nomination of the
Series B Director. A vacancy in the directorship elected solely by the holders
of Series B Preferred Stock shall be filled only by vote of the holders of
Series B Preferred Stock.
(c) Notwithstanding the provisions of Section 5(a) above, so
long as 7,216,309 shares of Series D Preferred Stock remain outstanding (as
adjusted for subsequent stock splits, recapitalizations and the like), the
holders of Series D Preferred Stock, voting as a separate class, shall be
entitled to elect one (1) director of the corporation (the "Series D Director").
At any meeting held for the purpose of electing or nominating directors, the
presence in person or by proxy of the holders of a majority of the Series D
Preferred Stock then outstanding shall constitute a quorum of the Series D
Preferred Stock for the election or nomination of the Series D Director. A
vacancy in the directorship elected solely by the holders of Series D Preferred
Stock shall be filled only by vote of the holders of Series D Preferred Stock.
(d) Notwithstanding the provisions of Section 5(a) above, so
long as 25% of the shares of Series E Preferred Stock outstanding on the date of
the original issuance thereof remain outstanding (as adjusted for subsequent
stock splits, recapitalizations and the like), the holders of Series E Preferred
Stock, voting as a separate class, shall be entitled to elect one (1) director
of the corporation (the "Series E Director"). At any meeting held for the
purpose of electing or nominating directors, the presence in person or by proxy
of the holders of a majority of the Series E Preferred Stock then outstanding
shall constitute a quorum of the Series E Preferred Stock for the election or
nomination of the Series E Director. A vacancy in the directorship elected
solely by the holders of Series E Preferred Stock shall be filled only by vote
of the holders of Series E Preferred Stock, and the holders of the Series E
Preferred Stock shall be entitled to remove the Series E Director, with or
without cause.
6. Protective Provisions.
(a) So long as at least twenty-five percent (25%) of the
shares of any series of Preferred Stock remain outstanding, this corporation
shall not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of a majority of the then outstanding shares of
Series A, Series B, Series C-1, Series C-2, Series C-3, Series D and Series E
Preferred Stock, voting together as a single class:
(i) sell, convey, or otherwise dispose of or encumber
all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any transaction or
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49
series of related transactions in which more than fifty percent (50%) of the
voting power of the corporation is disposed of;
(ii) alter or change the rights, preferences or
privileges of the shares of any series of Preferred Stock so as to adversely
affect the shares;
(iii) authorize or issue, or obligate itself to issue,
any other equity security, including any other security convertible into or
exercisable for any equity security having a preference over, or being on a
parity with, any then existing series of Preferred Stock with respect to voting,
dividends, redemption or upon liquidation; or
(iv) amend the corporation's Articles of Incorporation
or bylaws.
(b) So long as at least twenty-five percent (25%) of the
shares of Series E Preferred Stock remain outstanding, this corporation shall
not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least 51% of the then outstanding shares
of Series E Preferred Stock:
(i) alter or change the rights, preferences or
privileges of the shares of Series E Preferred Stock so as to adversely affect
the shares; or
(ii) authorize or issue, or obligate itself to issue,
any other equity security, including any other security convertible into or
exercisable for, any equity security having a preference over, or being on a
parity with, the Series E Preferred Stock, but junior to any other series of
Preferred Stock, with respect to voting, dividends, redemption or upon
liquidation.
7. Status of Converted Stock. In the event any shares of
Preferred Stock shall be converted pursuant to Section 4 hereof, the shares so
converted shall be cancelled and shall not be issuable by the corporation. The
Articles of Incorporation of this corporation shall be appropriately amended to
effect the corresponding reduction in the corporation's authorized capital
stock.
C. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when, as and if
declared by the Board, out of any assets of the corporation legally available
therefor, such dividends as may be declared from time to time by the Board.
2. Liquidation Rights. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III.
3. Redemption. The Common Stock is not redeemable.
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50
4. Voting Rights. Except as provided herein with respect to the
rights of the Preferred Stock or any series thereof to vote as a separate class
or series on any matter, the holder of each share of Common Stock shall have the
right to one vote, and shall be entitled to notice of any shareholders' meeting
in accordance with the bylaws of this corporation, and shall be entitled to vote
upon such matters and in such manner as may be provided by law.
ARTICLE IV
A. The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
B. The corporation is authorized, to the fullest extent permissible under
California law, to provide indemnification of agents (as defined in Section 317
of the California Corporations Code) through bylaw provisions, agreements with
the agents, vote of shareholders or disinterested directors, or otherwise in
excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject only to applicable limits set forth in
Section 204 of the California Corporations Code with respect to actions for
breach of duty to the corporation and its shareholders.
* * *
THREE: The foregoing amendment and restatement has been approved by
the Board.
FOUR: The foregoing amendment and restatement was approved by the
holders of the requisite number of shares of the corporation in accordance with
Sections 902 and 903 of the California General Corporation Law; the total number
of outstanding shares of each class entitled to vote with respect to the
foregoing amendment and restatement was 5,292,135 shares of Common Stock,
525,000 shares of Series A Preferred Stock, 5,512,000 shares of Series B
Preferred Stock, 569,525 shares of Series C-1 Preferred Stock, 605,122 shares of
Series C-2 Preferred Stock, 2,282,730 shares of Series C-3 Preferred Stock and
14,432,618 shares of Series D Preferred Stock. The number of shares voting in
favor of the foregoing amendment and restatement equaled or exceeded the vote
required, such required vote being (a) a majority of the outstanding shares of
Common Stock, Series A Preferred Stock, Series B Preferred Stock, Series C-1
Preferred Stock, Series C-2 Preferred Stock, Series C-3 Preferred Stock and
Series D Preferred Stock, voting together as a single class, (b) a majority of
the outstanding shares of Series A Preferred Stock, Series B Preferred Stock,
Series C-1 Preferred Stock, Series C-2 Preferred Stock, Series C-3 Preferred
Stock and Series D Preferred Stock, voting together as a single class, and (c) a
majority of the outstanding shares of Common Stock, voting as a single class.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this certificate on
______________, 1999.
_____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
_____________________________________
▇▇▇▇▇▇▇▇ ▇. Finder, Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Amended and Restated Articles of Incorporation and know the
contents thereof, and that the statements therein are true.
Executed at Palo Alto, California, on __________, 1999.
_____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
_____________________________________
▇▇▇▇▇▇▇▇ ▇. Finder, Secretary
[SIGNATURE PAGE TO AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF ADKNOWLEDGE INC.]
52
AMENDED AND RESTATED CO-SALE AGREEMENT
This Amended and Restated Co-Sale Agreement (the "Agreement") is made
this 10th day of February, 1999 by and among AdKnowledge Inc., a California
corporation (the "Company"), the holders of shares of the Company's Common Stock
listed on Exhibit A hereto (the "Shareholders," which term includes each
Shareholder's heirs, executors, guardians, successors and assigns), and the
holders of the Company's Series D Preferred Stock and Series E Preferred Stock
listed on Exhibit B hereto (the "Investors").
WHEREAS, each of the Shareholders is the beneficial owner of the number
of shares of the Company's Common Stock listed on Exhibit A hereto (the "Stock,"
which term for purposes of this Agreement also includes any additional shares of
Common Stock of the Company now owned or hereafter acquired by any Shareholder).
WHEREAS, certain of the Investors hold shares of the Company's Series D
Preferred Stock ("Series D Investors") and are parties to a Co-Sale Agreement
dated March 4, 1998, between the Company, each of the Shareholders and the
Series D Investors (the "Prior Agreement").
WHEREAS, certain of the Investors (the "Series E Investors") and the
Company are parties to the Series E Preferred Stock Purchase Agreement of even
date herewith, which provides for the sale and issuance of the Series E
Preferred Stock to such Series E Investors.
WHEREAS, in order to induce the Company to enter into the Series E
Preferred Stock Purchase Agreement and to induce the Series E Investors to
invest funds in the Company pursuant to the Series E Preferred Stock Purchase
Agreement, the Investors, the Shareholders and the Company agree that the Prior
Agreement shall be amended and restated by this Agreement and this Agreement
shall govern the rights of the Investors, Shareholders and the Company as to the
certain matters set forth herein in accordance with Section 6.2 of the Prior
Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties agree as follows:
1. Definitions.
(a) "Preferred Stock" shall mean the Company's outstanding Series
A, Series B, Series C-1, Series C-2, Series C-3, Series D and Series E Preferred
Stock.
(b) "Common Stock" shall mean (i) the Company's Common Stock,
(ii) shares of Common Stock issued or issuable upon conversion of the Company's
outstanding Preferred Stock, (iii) shares of Common Stock issuable upon exercise
of outstanding options to the extent such options are then exercisable and/or
the stock issuable thereupon would not be subject to repurchase by the Company,
and (iv) shares of Common Stock issuable upon conversion of any outstanding
convertible securities.
53
2. Sales by Shareholders.
(a) Subject to any right of first refusal in favor of the
Company, if any Shareholder proposes to sell or transfer any shares of Stock in
one or more related transactions which will result in (i) the transfer of 50,000
or more shares of Stock by such Shareholder or (ii) the transferee of such
shares holding more than fifty percent (50%) of the Common Stock, then such
Shareholder shall promptly give written notice (the "Notice") to the Company and
to the Investors at least twenty (20) days prior to the closing of such sale or
transfer. The Notice shall describe in reasonable detail the proposed sale or
transfer including, without limitation, the number of shares of Stock to be sold
or transferred, the nature of such sale or transfer, the consideration to be
paid, and the name and address of each prospective purchaser or transferee. In
the event that the sale or transfer is being made pursuant to the provisions or
paragraph 3(a) or 3(b) hereof, the Notice shall state under which paragraph the
sale or transfer is being made.
(b) Each Investor shall have the right, exercisable upon written
notice to such Shareholder within ten (10) days after receipt of the Notice, to
participate in such sale of Stock on the same terms and conditions. To the
extent one or more of the Investors exercise such right of participation in
accordance with the terms and conditions set forth below, the number of shares
of Stock that the Shareholder may sell in the transaction shall be
correspondingly reduced.
(c) Each Investor may sell all or any part of that number of
shares of Stock equal to the product obtained by multiplying (i) the aggregate
number of shares of Stock covered by the Notice by (ii) a fraction the numerator
of which is the number of shares of Common Stock owned by the Investor at the
time of the sale or transfer and the denominator of which is the total number of
shares of Common Stock outstanding at the time of the sale or transfer.
(d) If any Investor fails to elect to fully participate in such
Shareholder's sale pursuant to this Section 2, the Shareholder shall promptly
give notice of such failure to the Investors who did so elect (the
"Participants"). Such notice may be made by telephone if confirmed in writing
within two (2) days. The Participants shall have five (5) days from the date
such notice was given to agree to sell their pro rata share of the unsold
portion. For purposes of this paragraph, a Participant's pro rata share of an
unsold portion shall be the ratio of (x) the number of shares of Common Stock
held by such Participant to (y) the total number of shares of Common Stock held
by all the Participants and the Shareholder.
(e) Each Participant shall effect its participation in the sale
by promptly delivering to the Shareholder for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which
represent:
(i) the type and number of shares of Common Stock which such
Participant elects to sell; or
(ii) that number of shares of Series D Preferred Stock or
Series E Preferred Stock which is at such time convertible into the number of
shares of Common
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54
Stock which such Participant elects to sell; provided, however, that if the
prospective purchaser objects to the delivery of Series D Preferred Stock or
Series E Preferred Stock in lieu of Common Stock, such Participant shall convert
such Preferred Stock into Common Stock and deliver Common Stock as provided in
subparagraph 2(e)(i) above. The Company agrees to make any such conversion
concurrent with the actual transfer of such shares to the purchaser.
(f) The stock certificate or certificates that the Participant
delivers to the Shareholder pursuant to paragraph 2(e) shall be transferred to
the prospective purchaser in consummation of the sale of the Stock pursuant to
the terms and conditions specified in the Notice, and the Shareholder shall
concurrently therewith remit to such Participant that portion of the sale
proceeds to which such Participant is entitled by reason of its participation in
such sale. To the extent that any prospective purchaser or purchasers prohibits
such assignment or otherwise refuses to purchase shares or other securities from
a Participant exercising its rights of co-sale hereunder, the Shareholder shall
not sell to such prospective purchaser or purchasers any Stock unless and until,
simultaneously with such sale, the Shareholder shall purchase such shares or
other securities from such Participant for the same consideration and on the
same terms and conditions as the proposed transfer described in the Notice.
(g) The exercise or non-exercise of the rights of the
Participants hereunder to participate in one or more sales of Stock made by the
Shareholder shall not adversely affect their rights to participate in subsequent
sales of Stock subject to paragraph 2(a).
(h) If none of the Investors elect to participate in the sale of
the Stock subject to the Notice, the Shareholder may, not later than sixty (60)
days following delivery to the Company and each of the Investors of the Notice,
conclude a transfer of not less than all of the Stock covered by the Notice on
terms and conditions not more favorable to the transferor than those described
in the Notice. Any proposed transfer on terms and conditions more favorable than
those described in the Notice, as well as any subsequent proposed transfer of
any of the Stock by the Shareholder, shall again be subject to the co-sale
rights of the Investors and shall require compliance by the Shareholder with the
procedures described in this Section 2.
3. Exempt Transfers.
(a) Notwithstanding the foregoing, the co-sale rights of the
Investors shall not apply to (i) any pledge of Stock made pursuant to a bona
fide loan transaction that creates a mere security interest, (ii) any transfer
to the ancestors, descendants or spouse or to trusts for the benefit of such
persons or a Shareholder; or (iii) any bona fide gift; provided that (A) the
transferring Shareholder shall inform the Investors of such pledge, transfer or
gift prior to effecting it and (B) the pledgee, transferee or donee shall
furnish the Investors with a written agreement to be bound by and comply with
all provisions of this Agreement. Such transferred Stock shall remain "Stock"
hereunder, and such pledgee, transferee or donee shall be treated as a
"Shareholder" for purposes of this Agreement.
(b) Notwithstanding the foregoing, the provisions of Section 2
shall not apply to the sale of any Stock (i) to the public pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), (ii) to the Company pursuant to a stock restriction
3
55
agreement between the Shareholder and the Company which provides the Company
with the right to repurchase such Stock upon the occurrence of certain events,
or (iii) if prior to such sale, the Shareholder held less than five percent (5%)
of the Company's outstanding shares or the Shareholders collectively held less
than ten percent (10%) of the Company's outstanding shares.
4. Prohibited Transfers.
(a) In the event a Shareholder should sell any Stock in
contravention of the co-sale rights of the Investors under this agreement (a
"Prohibited Transfer"), the Investors, in addition to such other remedies as may
be available at law, in equity or hereunder, shall have the put option provided
below, and the Shareholder shall be bound by the applicable provisions of such
option.
(b) In the event of a Prohibited Transfer, each Investor shall
have the right to sell to the Shareholder the type and number of shares of Stock
equal to the number of shares each Investor would have been entitled to transfer
to the purchaser under Section 2(c) hereof had the Prohibited Transfer been
effected pursuant to and in compliance with the terms hereof. Such sale shall be
made on the following terms and conditions:
(i) The price per share at which the shares are to be sold
to the Shareholder shall be equal to the price per share paid by the purchaser
to the Shareholder in the Prohibited Transfer. The Shareholder shall also
reimburse each Investor for any and all fees and expense, including legal fees
and expenses, incurred pursuant to the exercise or the attempted exercise of the
Investor's rights under Section 2.
(ii) Within ninety (90) days after the later of the dates on
which the Investor (A) received notice of the Prohibited Transfer or (B)
otherwise become aware of the Prohibited Transfer, each Investor shall, if
exercising the option created hereby, deliver to the Shareholder the certificate
or certificates representing shares to be sold, each certificate to be properly
endorsed for transfer.
(iii) The Shareholder shall, upon receipt of the certificate
or certificates for the shares to be sold by an Investor, pursuant to this
subparagraph 4(b), pay the aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in subparagraph 4(b)(i), in cash or
by other means acceptable to the Investor.
(iv) Notwithstanding the foregoing, any attempt by a
Shareholder to transfer Stock in violation of Section 2 hereof shall be void and
the Company agrees it will not effect such a transfer nor will it treat any
alleged transferee as the holder of such shares without the written consent of a
majority in interest of the Investors.
5. Legend.
(a) Each certificate representing shares of Stock now or
hereafter owned by the Shareholders or issued to any person in connection with a
transfer pursuant to Section 3(a) hereof shall be endorsed with the following
legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF
4
56
THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
AND CONDITIONS OF A CERTAIN AMENDED AND RESTATED CO-SALE AGREEMENT BY
AND BETWEEN THE SHAREHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF
STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
(b) Each Shareholder agrees that the Company may instruct its
transfer agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in Section 5(a) above to enforce the
provisions of this Agreement and the Company agrees to promptly do so. The
legend shall be removed upon termination of this Agreement.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the State
of California.
6.2 Amendment. Any provision may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by the written consent of (i) as to the
Company, only by the Company, (ii) as to the Investors, by persons holding more
than fifty percent (50%) in interest of the Common Stock held by the Investors
and their assignees, pursuant to Section 6.3 hereof, and (iii) as to each
Shareholder, such Shareholder, provided that any Investor may waive any of his
rights hereunder without obtaining the consent of any other Investor. Any
amendment or waiver effected in accordance with clauses (i), (ii) and (iii) of
this paragraph shall be binding upon each Investor, its successors and assigns,
the Company and the Shareholder in question.
6.3 Assignment of Rights. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
The rights of the Investors hereunder are only assignable (i) by each of such
Investors to any other Investor or (ii) to an assignee or transferee who
acquires all of the Common Stock purchased by an Investor or at least 50,000
shares of Common Stock.
6.4 Term. This Co-Sale Agreement shall terminate upon the earlier
of (i) the closing of a firm commitment underwritten public offering pursuant to
an effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of the Company's Common Stock at a price
per share of not less than $2.70 (as adjusted for stock splits, reverse stock
splits and the like effected after the date of this Agreement) and an aggregate
offering price of not less than $10,000,000, (ii) the closing of the Company's
sale of all or substantially all of its assets or the acquisition of the Company
by another entity by means of merger or consolidation resulting in the exchange
of the outstanding shares of the Company's capital stock for securities or
consideration issued, or caused to be issued, by the acquiring entity or its
subsidiary, (iii) such time as the Investors and their assignees, pursuant to
Section 6.3
5
57
hereof, hold an aggregate of less than 5,000,000 shares of Common Stock, and
(iv) the execution by the Company of a general assignment for the benefit of
creditors or the appointment of a receiver or trustee to take possession of the
property and assets of the Company.
6.5 Ownership. Each Shareholder represents and warrants that he
is the sole legal and beneficial owner of the shares of stock subject to this
Agreement and that no other person has any interest (other than a community
property interest) in such shares.
6.6 Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given upon personal delivery to the
party to be notified or five (5) days after deposit in the United States mail,
by registered or certified mail, postage prepaid and properly addressed to the
party to be notified as set forth on the signature page hereof or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties hereto. Notwithstanding the foregoing, the telephone notice
permitted by Section 2(d) shall be effective at the time it is given.
6.7 Severability. In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
6.8 Attorney Fees. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.10 Stock Split. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.
6.11 Aggregation of Stock. All shares of Common Stock held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
58
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ADKNOWLEDGE INC.
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTORS: SANDLER CAPITAL IV PARTNERS, L.P.
By: Sandler Capital Management, a
General Partner
By: MJDM Corp., a General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
SANDLER CAPITAL IV FTE PARTNERS, L.P.
By: Sandler Capital Management, a
General Partner
By: MJDM Corp., a General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address:
-------------------------------------------
-------------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
59
▇▇▇▇▇▇▇▇ PARTNERS, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address:
-------------------------------------------
-------------------------------------------
▇▇▇▇▇▇▇▇ FOREIGN PARTNERS, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address:
-------------------------------------------
-------------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
60
▇▇▇▇▇▇-SBIC, L.P
By:
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
General Partner
▇▇▇▇▇▇ TECHNOLOGY VENTURES II, L.P.
By:
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
General Partner
▇▇▇▇▇▇ EDB PARTNERS, L.P.
By:
------------------------------------
Lip-Bu Tan
General Partner
▇▇▇▇▇▇ JAPAN PARTNERS, L.P.
By:
------------------------------------
Lip-Bu Tan
General Partner
▇▇▇▇▇▇ MEDIA & INFORMATION TECHNOLOGY, L.P.
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
61
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB INFORMATION SCIENCES ZAIBATSU FUND II
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB JAVA FUND
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB VIII
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
KPCB VIII FOUNDERS FUND
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address: c/o Kleiner ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
62
PARTECH U.S. PARTNERS III C.V.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
PARVEST U.S. PARTNERS II C.V.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
DOUBLE BLACK DIAMOND II LLC
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
ALMANORI LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
MULTINVEST LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
63
PARTECH EUROPE PARTNERS III C.V.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
AXA U.S. GROWTH FUND LLC
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
PARRALLEL CAPITAL I LLC
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
45TH PARRALLEL
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address: c/o Partech International
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
64
TECHNO VII (A) LIMITED PARTNERSHIP
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
TECHNO VII (B) LIMITED PARTNERSHIP
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
TECHNO VIII LIMITED PARTNERSHIP
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
65
INFOTECH VENTURES LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
O, W & W INVESTMENTS LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
66
▇▇▇▇▇▇▇▇ VII
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇▇ ASSOCIATES FUND II
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇▇ SOFTWARE PARTNERS
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address: c/▇ ▇▇▇▇▇▇▇▇ Fund
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, #▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
67
SHAREHOLDERS:
--------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address:
-------------------------------------------
-------------------------------------------
---------------------------------------------------
Thi Thumasathit
Address:
-------------------------------------------
-------------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT]
68
Exhibit A
Shareholder List
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
69
Exhibit B
Investor List
Sandler Capital IV Partners, ▇.▇.
▇▇▇▇▇▇▇ Capital IV FTE Partners, L.P.
GEO Capital
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII
KPCB Info Sciences Zaibatsu II
KPCB Java Fund
KPCB VIII
KPCB VIII Founders Fund
▇▇▇▇▇▇▇▇ VII
▇▇▇▇▇▇▇▇ Associates Fund II
▇▇▇▇▇▇▇▇ Software Partners
▇▇▇▇▇▇-SBIC, ▇.▇.
▇▇▇▇▇▇ Technology Ventures II, ▇.▇.
▇▇▇▇▇▇ EDB Partners, ▇.▇.
▇▇▇▇▇▇ Japan Partners, ▇.▇.
▇▇▇▇▇▇ Media & Info. Tech.
Partech U.S. Partners III C.V.
Parvest U.S. Partners II C.V.
Double Black Diamond II LLC
Almanori Limited
Multinvest Limited
Partech Europe Partners III C.V.
Axa U.S. Growth Fund LLC
Parallel Capital I LLC
45th Parallel
Techno VII (A) Limited Partnership
Techno VII (B) Limited Partnership
Techno VIII Limited Partnership
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
InfoTech Ventures Ltd.
Asian Venture Capital Investment Corp.
TWG Investment LDC
O, W & W Investments Ltd.
70
CONSENT OF SPOUSE
I, __________________________, the spouse of _______________________,
one of the shareholders referred to as a "Shareholder" in the foregoing Amended
and Restated Co-Sale Agreement, dated February ___, 1999, acknowledge that I
have read the foregoing Agreement and that I know its contents. I am aware that
by its provisions if I and/or my spouse agree to sell all or part of the shares
of the Company held of record by either or both of us, including my community
interest in such shares, if any, co-sale rights (as described in the Agreement)
must be granted to the Investors (as defined in the Agreement) by the seller. I
hereby agree that those shares and my interest in them, if any, are subject to
the provisions of the Agreement and that I will take no action at any time to
hinder operation of, or violate, the Agreement.
Signature: _____________________
Effective: February ___, 1999 Print Name _____________________
71
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made as of the 10th day of
February 1999, by and among AdKnowledge Inc., a California corporation (the
"Company") and the persons identified on Exhibit A attached hereto (the "Series
E Investors").
RECITALS
A. The Series E Investors desire to purchase shares of the Company's
Series E Preferred Stock (the "Series E Shares") and the Company desires to sell
such shares to the Series E Investors;
B. The Company and the Series E Investors acknowledge that they are
entering into this Agreement as an inducement to and in consideration of the
purchase of the Series E Shares by the Series E Investors pursuant to that
certain Series E Preferred Stock Purchase Agreement dated as of the date hereof
among the Company and the Series E Investors (the "Purchase Agreement").
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. Agreement to Vote for Sandler Capital IV Partners, L.P. Nominee.
a. During the term of this Agreement, each of the Series E
Investors agrees to vote all of the Series E Shares now or hereafter owned by it
to elect to the Company's Board of Directors the nominee (the "Sandler Nominee")
of Sandler Capital IV Partners, L.P. ("Sandler") to fill that director seat to
be elected by the holders of the Series E Shares in accordance with the
Company's Articles of Incorporation.
b. Prior to each election of directors of the Company, Sandler
shall designate the Sandler Nominee in writing to the Company. The Company shall
promptly notify each of the Series E Investors of such nominee. Any vacancy
occurring because of the death, resignation, removal or disqualification of the
Sandler Nominee shall be filled according to this Section 1.
c. During the term of this Agreement, Sandler may, in its sole
discretion, elect to remove from the Company's Board of Directors any incumbent
Sandler Nominee who occupies a board seat and/or designate a new Sandler Nominee
for election to such board seat. In the event of such a removal and/or
designation of a new Sandler Nominee under this subsection, the Series E
Investors shall vote their shares of the Company's capital stock as provided in
this Section 1 to cause: (i) the removal from the Company's Board of Directors
of the Sandler Nominee so designated for removal by Sandler and (ii) the
election to the Company's Board of Directors of any new Sandler Nominee so
designated for election to the Company's Board of Directors by Sandler.
72
2. Covenants of the Company and Series E Investors. The Company and the
Series E Investors agree to use their reasonable efforts to ensure that the
rights given to the Series E Investors hereunder are effective. Such reasonable
efforts shall include, without limitation, the use of the Company's reasonable
efforts to cause the nomination of the Sandler Nominee to be elected as the
directors of the Company at each election of the Board of Directors. Neither the
Company nor the Series E Investors shall, by any voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be performed
hereunder by the Company or the Series E Investors, respectively, but shall at
all times in good faith assist in the carrying out of all of the provisions of
this Agreement and shall use their reasonable efforts to protect the respective
rights of each party hereto against impairment.
3. Successor and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the executors, administrators, legal
representatives, heirs, successors and assigns of the parties hereto; provided,
however, that any transferee of any shares of stock of the Company affected by
this Agreement shall be required, as a condition precedent to acquiring such
shares, to first agree in writing to be bound by all the terms and conditions of
this Agreement applicable to such transferee's transferor; and, provided
further, that no rights under this Agreement may be assigned apart from the
related shares of the Company's capital stock.
4. Legends. Each certificate representing Series E Preferred Stock of
the Company that is subject to this Agreement shall be endorsed by the Company
with the following legend:
THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT (A COPY
OF WHICH MAY BE OBTAINED FROM THE ISSUER), AND BY ACCEPTING ANY
INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE
DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID
VOTING AGREEMENT.
5. Other Rights. Except as provided by this Agreement, each Series E
Investor shall exercise the full voting rights of a shareholder with respect to
the Series E Shares.
6. Termination. This Agreement shall terminate upon the earlier of (i)
the consummation of the Company's initial public offering on a firm underwriting
basis, (ii) the closing of a consolidation or merger of the Company with or into
any other corporation or corporations, or a sale, conveyance or disposition of
all or substantially all of the assets of the Company or the effectuation by the
Company of a transaction or series of related transactions in which more than
50% of the voting power of the Company is disposed, or (iii) ten (10) years from
the date of this Agreement.
7. Amendments and Waivers. Any term hereof may be amended and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and (a) with respect to the rights of Sandler, Sandler;
or (b) with respect to the rights of the Series E Investors, the holders of a
majority of the Series E Shares then held by the Series E Investors. Any
amendment
-2-
73
or waiver so effected shall be binding upon the Company, Sandler and
all of the Series E Investors and their successors and permitted assigns.
8. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with regard to the subject hereof, and this Agreement
supersedes any and all prior negotiations, correspondence, understandings and
agreements among the parties respecting the subject matter hereof.
9. Severability. Whenever possible, 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 shall be 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 such provision or the remaining provisions of this
Agreement.
10. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
11. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement 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, five (5) days after deposit with the United States
Post Office, by registered or certified mail, postage prepaid, or one (1) day
after deposit with a nationally recognized overnight delivery service, postage
prepaid, and addressed to the party to be notified at the address indicated for
such party on the signature page hereof, or at such other address as such party
may designate by ten (10) days' advance written notice to the other parties.
12. Equitable Remedies. The Company and the Series E Investors each
acknowledge and agree that the legal remedies available to each party in the
event any party violates the covenants and agreements made in this Agreement
would be inadequate and that each party shall be entitled, without posting any
bond or other security, to temporary, preliminary, and permanent injunctive
relief, specific performance and other equitable remedies in the event of such a
violation, in addition to any other remedies which such party may have at law or
in equity.
13. Counterparts. This Agreement may be executed in any number
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-3-
74
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
THE COMPANY:
ADKNOWLEDGE INC.
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
SERIES E INVESTORS: SANDLER CAPITAL IV PARTNERS, L.P.
By: Sandler Capital Management, a
General Partner
By: MJDM Corp., a General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
SANDLER CAPITAL IV FTE PARTNERS, L.P.
By: Sandler Capital Management, a
General Partner
By: MJDM Corp., a General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address:
-------------------------------------------
-------------------------------------------
[SIGNATURE PAGE TO VOTING AGREEMENT]
75
▇▇▇▇▇▇▇▇ PARTNERS, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address:
-------------------------------------------
-------------------------------------------
▇▇▇▇▇▇▇▇ FOREIGN PARTNERS, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Address:
-------------------------------------------
-------------------------------------------
[CONTINUED SIGNATURE PAGE TO VOTING AGREEMENT]
76
▇▇▇▇▇▇-SBIC, L.P
By:
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
General Partner
▇▇▇▇▇▇ TECHNOLOGY VENTURES II, L.P.
By:
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
General Partner
▇▇▇▇▇▇ EDB PARTNERS, L.P.
By:
------------------------------------
Lip-Bu Tan
General Partner
▇▇▇▇▇▇ JAPAN PARTNERS, L.P.
By:
------------------------------------
Lip-Bu Tan
General Partner
▇▇▇▇▇▇ MEDIA & INFORMATION TECHNOLOGY, L.P.
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[CONTINUED SIGNATURE PAGE TO VOTING AGREEMENT]
77
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB INFORMATION SCIENCES ZAIBATSU FUND II
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB JAVA FUND
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
General Partner
KPCB VIII FOUNDERS FUND
By:
------------------------------------
Address: c/o Kleiner ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇
[CONTINUED SIGNATURE PAGE TO VOTING AGREEMENT]
78
PARTECH U.S. PARTNERS III C.V.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
PARVEST U.S. PARTNERS II C.V.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
DOUBLE BLACK DIAMOND II LLC
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
ALMANORI LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
MULTINVEST LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
[CONTINUED SIGNATURE PAGE TO VOTING AGREEMENT]
79
PARTECH EUROPE PARTNERS III C.V.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
AXA U.S. GROWTH FUND LLC
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
PARRALLEL CAPITAL I LLC
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
45TH PARRALLEL
By:
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Name:
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Title:
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Address: c/o Partech International
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[CONTINUED SIGNATURE PAGE TO VOTING AGREEMENT]
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TECHNO VII (A) LIMITED PARTNERSHIP
By:
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Name:
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Title:
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TECHNO VII (B) LIMITED PARTNERSHIP
By:
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Name:
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Title:
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TECHNO VIII LIMITED PARTNERSHIP
By:
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Name:
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Title:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
By:
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Name:
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Title:
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[CONTINUED SIGNATURE PAGE TO VOTING AGREEMENT]
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INFOTECH VENTURES LTD.
By:
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Name:
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Title:
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O, W & W INVESTMENTS LTD.
By:
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Name:
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Title:
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Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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[CONTINUED SIGNATURE PAGE TO VOTING AGREEMENT]
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EXHIBIT A
SERIES E INVESTORS
Sandler Capital IV Partners, ▇.▇.
▇▇▇▇▇▇▇ Capital IV FTE Partners, L.P.
Geo Capital
▇▇▇▇▇▇-SBIC, ▇.▇.
▇▇▇▇▇▇ Technology Ventures II, ▇.▇.
▇▇▇▇▇▇ EDB Partners, ▇.▇.
▇▇▇▇▇▇ Japan Partners, ▇.▇.
▇▇▇▇▇▇ Media & Information Technology
KPCB Java Fund
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII
KPCB Information Sciences Zaibatsu Fund II
KPCB VIII Founders Fund
Partech U.S. Partners III C.V.
Partech Europe Partners III C.V.
Parvest U.S. Partners II C.V.
Axa U.S. Growth Fund LLC
Parallel Capital I LLC
45th Parallel
Double Black Diamond II LLC
Almanori Limited
Multinvest Limited
Techno VII(A) Limited Partnership
Techno VII(B) Limited Partnership
Techno VIII Limited Partnership
▇▇▇▇▇▇▇ Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
InfoTech Ventures Ltd.
Asian Venture Capital Investment Corp.
TWG Investment LDC
O, W & W Investments Ltd.
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ADKNOWLEDGE INC.
VOTING AGREEMENT
FEBRUARY 10, 1999
84
TABLE OF CONTENTS
Page
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1. Agreement to Vote for Sandler Capital IV Partners, L.P.Nominee...........1
2. Covenants of the Company and Series E Investors..........................2
3. Successor and Assigns....................................................2
4. Legends..................................................................2
5. Other Rights.............................................................2
6. Termination..............................................................2
7. Amendments and Waivers...................................................3
8. Entire Agreement.........................................................3
9. Severability.............................................................3
10. Governing Law............................................................3
11. Notices..................................................................3
12. Equitable Remedies.......................................................3
13. Counterparts.............................................................4