STOCK PURCHASE AGREEMENTAsset Purchase Agreement |
|
|
You are currently viewing: This Asset Purchase Agreement involves
LOCAL MATTERS, INC. | ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | KINGS ROAD INVESTMENTS LTD. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
|
|
|
|
STOCK PURCHASE AGREEMENT by and among LOCAL MATTERS, INC., and KINGS ROAD INVESTMENTS LTD. Second Closing, dated as of November 23, 2005
STOCK PURCHASE AGREEMENT, dated as of November 14, 2005, by and among Local Matters, Inc., a Delaware corporation (the " Company "), and Kings Road Investments Ltd.(the " Purchaser "). WHEREAS, on October 14, 2005, the Company issued and sold to Sandler Capital Partners V, L.P. and its affiliates (collectively, the " Prior Purchasers "), for an aggregate purchase price of $20,000,000, an aggregate of 5,000,000 shares of Series 3 Preferred Stock, par value $0.001 per share, of the Company (the " Series 3 Preferred "), pursuant to that certain Stock Purchase Agreement among the Prior Purchasers and the Company, dated October 14, 2005 (the " Prior Purchase Agreement "); WHEREAS, on October 14, 2005, the Company purchased all of the outstanding capital stock of Online Web Marketing, Inc., a Utah corporation (" OLWM "), and all of the outstanding capital stock of MyAreaGuide.com, Inc., a Nevada corporation (" MAG ") (collectively, the " Acquisition "), pursuant to that certain draft Stock Purchase Agreement, by and among the Company, Tyler Houston, Shane Brinkerhoff, Dustin Moore and Aaron Bromagem (the " Acquisition Agreement "); and WHEREAS, upon the terms and conditions set forth in this Agreement, the Company proposes to issue and sell to the Purchaser, for an aggregate purchase price of $5,000,000, an aggregate of 1,250,000 shares of Series 3 Preferred; NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1.1 Definitions . As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: " Affiliate " shall mean any Person who, directly or indirectly, controls, is controlled by or is under common control with any other Person. " Acquisition " has the meaning set forth in the recitals to this Agreement. " Acquisition Agreement " has the meaning set forth in the recitals to this Agreement. " Acquisition Audited Financial Statements " has the meaning set forth in Section 3.11. " Acquisition Financial Statements " has the meaning set forth in Section 3.11. " Acquisition Unaudited Financial Statements " has the meaning set forth in Section 3.11. " Agreement " means this agreement as the same may be amended, supplemented or modified in accordance with the terms hereof. " Amended and Restated Certificate of Incorporation " means the Amended and Restated Certificate of Incorporation of the Company, filed on or before the date hereof, containing the terms of the Series 3 Preferred in the form attached hereto as Exhibit B . " Assets " has the meaning set forth in Section 3.18. " Balance Sheet Date " has the meaning set forth in Section 3.11. " Basket Exclusion " has the meaning set forth in Section 7.1. " Benefit Plans " has the meaning set forth in section 3.17. 1 " Board of Directors " means the Board of Directors of the Company. " Business " means the businesses carried on by the Company or its Affiliates or Subsidiaries or proposed in writing to be carried on by such entities. " Business Day " means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. " Bylaws " means the by laws of the Company in effect on the date hereof, as the same may be amended from time to time. " CERCLA " means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.), as amended, and any legally enforceable rules, regulations and standards issued thereunder. " Claims " has the meaning set forth in Section 3.5. " Closing " has the meaning set forth in Section 2.4. " Closing Date " has the meaning set forth in Section 2.4. " Code " means the Internal Revenue Code of 1986, as amended, and any successor statute or subsequent codification or recodification of the federal income tax laws of the United States. " Commercially Available Software " means software that is generally and readily available to commercial licensees, (a) the loss of the use of which by any of the Company or any Subsidiary would not be materially adverse to the Company or any Subsidiary and (b) the license to which would be replaceable in the ordinary course on substantially similar terms as the current license to such software. " Commission " means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act. " Common Stock " shall mean common stock, par value $0.001 per share, of the Company (the " Common Stock "). " Common Stock Warrants " means warrants to purchase Common Stock. " Company " has the meaning set forth in the preamble to this Agreement. " Company Audited Financial Statements " has the meaning set forth in Section 3.11. " Company Employee Benefit Plans " has the meaning set forth in Section 3.17. " Company Financial Statements " has the meaning set forth in Section 3.11. " Company Indemnified Party " has the meaning set forth in Section 7.1. " Company Indemnifying Party " has the meaning set forth in Section 7.1. " Company Unaudited Financial Statements " has the meaning set forth in Section 3.11. " Condition of the Company " means the assets, business, properties, operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. " Contingent Obligation " means, as applied to any Person, any direct or indirect liability of that Person with respect to any Indebtedness, lease, dividend, guaranty, letter of credit or other obligation, contractual or otherwise (the " primary obligation ") of another Person (the " primary obligor "), whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet 2 item, level of income or financial condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof. " Contractual Obligations " means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, in each case, whether written or oral, to which such Person is a party or by which it or any of its property is bound. " Copyrights " means any United States or foreign copyright registrations and applications for registration thereof, including all renewals and extensions thereof, and any non-registered copyrights. " Dollars " or " $ " means United States dollars. " Environmental Laws " means all federal, state, foreign, international and local Requirements of Law in effect as of the Closing Date relating to pollution protection of the environment or health and safety (including, without limitation, ambient air, surface water, groundwater, land surface, subsurface strata or mold) including, without limitation, those relating to emissions, discharges, releases or threatened releases of Hazardous Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances. " ERISA " means the Employee Retirement Income Security Act of 1974, as amended. " ERISA Affiliate " means any trade or business, whether or not incorporated, that together with the Company or any of its Subsidiaries would be deemed a "single employer" within the meaning of Section 400l(b) of ERISA. " Exchange Act " means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. " Financial Statements " has the meaning set forth in Section 3.11. " GAAP " means United States generally accepted accounting principles. " Governmental Authority " means the government of any nation, state, province, city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through shares or capital ownership or otherwise, by any of the foregoing. " Hazardous Substances " shall mean any substances defined, regulated or listed as hazardous, dangerous or toxic, or potentially hazardous, dangerous or toxic, or defined as waste, pollutants or contaminants, under Environmental Laws, including, without limitations, asbestos, petroleum products or any substance within the meaning of § 101(14) of CERCLA, or defined or listed as "hazardous substances," "hazardous materials," "toxic substances," "oil," "contaminant" or "pollutant" under any other applicable Environmental Laws. " Improvements " has the meaning set forth in Section 3.9. " Indebtedness " means, as to any Person, (a) all obligations of such Person for borrowed money (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured), (b) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable and accrued 3 commercial or trade liabilities arising in the ordinary course of business, (c) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases, (f) all indebtedness secured by any Lien (other than Liens in favor of lessors under leases other than leases included in clause (e)) on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, and (g) all Contingent Obligations of such Person. " Indemnified Party " has the meaning set forth in Section 7.1. " Indemnifying Party " has the meaning set forth in Section 7.1. " Intellectual Property " has the meaning set forth in Section 3.20. " Internet Assets " means any Internet domain names and other computer user identifiers and any rights in and to sites on the worldwide web, including rights in and to any text, graphics, audio and video files and html or other code incorporated in such sites. " Investor Rights Agreement " means the Third Amended and Restated Investor Rights Agreement substantially in the form attached hereto as Exhibit D . " IPO " means an initial public offering of equity securities in an underwritten public offering pursuant to an effective registration statement on Form S-1 or any similar or successor form. " IPO Price " means the price to the public per share of Common Stock in the IPO. " Knowledge of the Company " means the knowledge of the officers of the Company and ISx. For purposes of this definition, a person shall be deemed to have "knowledge" of a particular fact or circumstance if such person has actual knowledge thereof or if a reasonable individual in such person's position at the Company or ISx, as applicable, should have discovered or otherwise been aware of such fact or circumstance in the ordinary course of his or her employment. " Leased Real Property " has the meaning set forth in Section 3.9. " Liabilities " has the meaning set forth in Section 3.19. " Lien " means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred shares and equity related preferences). " Losses " has the meaning set forth in Section 7.1. " MAG " has the meaning set forth in the recitals to this Agreement. " Material Adverse Effect " means a material adverse change in or effect upon (a) the Condition of the Company or (b) the ability of the Company to perform its obligations hereunder and under the other Transaction Documents. " Off-the-Shelf Software " means off-the-shelf personal computer software as such term is commonly understood, that is commercially available under non-discriminatory pricing terms on a retail basis for less than $5000 per seat and $25,000 in the aggregate, and used solely on the personal computers of the Company or a Subsidiary. " OLWM " has the meaning set forth in the recitals to this Agreement. 4 " Option Plans " shall mean the Aptas 1999 Equity Incentive Plan, the Information Services Extended, Inc. 2001 Stock Plan and the Local Matters, Inc. 2004 Equity Incentive Plan. " Orders " has the meaning set forth in Section 3.2. " Patents " means any United States or foreign patents, patent applications or industrial rights, statutory invention registrations or disclosures, including any divisions, continuations, continuations-in-part, substitutions, reexaminations or reissues of the foregoing, whether or not patents are issued on such applications and whether or not such applications are modified, withdrawn or resubmitted and all rights therein. " Pension Plan " has the meaning set forth in Section 3.17. " Permits " has the meaning set forth in Section 3.6. " Permitted Liens " means those encumbrances, liens and security interests listed on Schedule 3.18 . " Person " means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by amalgamation or otherwise) of such entity. " Preferred Stock " means the Series 1 Preferred, the Series 2 Preferred and the Series 3 Preferred. " Prior Acquisition Agreements " means (i) the Stock Purchase Agreement entered into by the Company, Spencer Trask Intellectual Capital Company, LLC and International Business Machines Corporation, dated April 14, 2005, and (ii) the Asset Purchase Agreement, entered into by the Company, YP Web Partners, LLC and certain other parties, dated March 31, 2005. " Pro Forma Financial Statements " has the meaning set forth in Section 3.11. " Purchased Stock " has the meaning set forth in Section 2.1. " Purchaser Indemnified Party " has the meaning set forth in Section 7.1. " Purchaser Indemnifying Parties " has the meaning set forth in Section 7.1. " Purchaser " has the meaning set forth in the preamble to this Agreement. " Real Property Leases " has the meaning set forth in Section 3.9. " Requirements of Law " means, as to any Person, any law, statute, treaty, rule, regulation, right, privilege, qualification, license or franchise or determination of an arbitrator or a court or other Governmental Authority or stock exchange, in each case applicable or binding upon such Person or any of its property or to which such Person or any of its property is subject or pertaining to any or all of the transactions contemplated or referred to herein. " Retiree Welfare Plan " means any welfare plan (as defined in Section 3(1) of ERISA) that provides benefits to current or former employees beyond their retirement or other termination of service (other than coverage mandated by Section 4980A of the Code, commonly referred to as "COBRA," the cost of which is fully paid by the current or former employee or his or her dependents). " Schedule " refers to a section of the Disclosure Schedule delivered herewith. " Securities Act " means the United States Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder. " Self-Help Mechanism " means any back door, time bomb, drop dead device, or other software routine designed to disable a computer program automatically with the passage of time or under the 5 positive control of a Person other than an authorized licensee or owner of a copy of the program or the right and title in and to the program. " Series 1 Preferred " means the 9,029,447 shares of Series 1 Convertible Participating Preferred Stock, par value $0.001 per share, of the Company, that are convertible, after giving effect to the Transaction, into 9,029,447 shares of Common Stock. " Series 2 Preferred " means the 17,840,000 shares (including 2,840,000 shares of Series 2 Preferred issuable upon the exercise of outstanding Series 2 Warrants) of Series 2 Convertible Participating Preferred Stock, par value $0.001 per share, of the Company, that are convertible, after giving effect to the Transaction, into 4,580,153 shares of Common Stock. " Series 3 Preferred " has the meaning set forth in the recitals to this Agreement. " Series 1 Warrants " means warrants to purchase shares of Series 1 Preferred. " Series 2 Warrants " means warrants to purchase shares of Series 2 Preferred. " Series 3 Warrants " means warrants to purchase shares of Series 3 Preferred. " Software " means any computer software programs, source code, object code, data, databases, specifications and documentation, including, without limitation, any computer software programs that incorporate and run the Company pricing models, formulae and algorithms. " Stock Equivalents " means, as to any Person, any security or obligation which is by its terms convertible into or exchangeable or exercisable for common stock or other capital stock of such Person, including, without limitation any option, warrant or other subscription or purchase right with respect to the common stock or such other capital stock of such Person and any convertible debt instruments that are convertible into shares of common stock or other capital stock of such Person. In addition, "Stock Equivalents" shall include any agreement, undertaking or other arrangement, including so-called "phantom shock" arrangements, that by its terms is intended to replicate the economic returns of any class of capital stock of such Person. " Subsidiaries " means, as of the relevant date of determination, with respect to any Person, a corporation or other Person of which 10% or more of the voting power of the outstanding voting equity securities or 10% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. Unless otherwise qualified, or the context otherwise requires, all references to a " Subsidiary " or to " Subsidiaries " in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. " Tax " or " Taxes " shall mean (i) any and all taxes, charges, fees, levies, excises, premiums, assessments, imposts, duties and fees or other like assessments or charges of any kind whatsoever imposed by any Governmental Authority, or as a result of being a member of an affiliated, consolidated, combined or unitary group for any period (including, without limitation, gross receipts, profits, sales, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll, employment, excise, property, license, severance, stamp, premium, windfall profits, capital stock, social security (or similar), unemployment, disability, alternative or add-on minimum and estimated taxes), (ii) any interest and penalties, additions to tax or additional amounts imposed by any Governmental Authority in connection with (A) any item described in clause (i) or this clause (ii) or (B) the failure to comply with any requirement imposed with respect to any Tax Return, (iii) any obligation with respect to Taxes described in clause (i) and/or (ii) above payable by reason of contract, assumption, transferee or successor liability, operation of Law, Treasury Regulation section 1.1502-6(a) (or predecessor or successor thereof or any analogous or similar provision under Law) or otherwise. 6 " Tax Return " shall mean any returns, reports, declarations, elections, notices, designations, filings, statements, forms, and information returns and reports filed or required to be filed with any taxing authority in respect of Taxes, including any schedules thereto. " Threshold Amount " has the meaning set forth in Section 7.1. " Trade Secrets " means any trade secrets, confidential business information, concepts, ideas, research or development records or information, customer lists and personally identifiable information, processes, procedures, manufacturing formulae, technical information, know-how, data, technology, blue prints, designs, plans, specifications, operating and maintenance manuals, engineering drawings, discoveries, inventions (whether patentable, whether reduced to practice and whether subject to copyright, mask work or trade secret protection), invention disclosures and improvements thereto. " Trademarks " means any United States or foreign trademarks, service marks, trade dress, trade names, brand names, designs and logos, corporate names, product or service identifiers (including in each case the goodwill associated therewith), whether registered or unregistered, and all registrations and applications for registration thereof. " Transaction " has the meaning set forth in Section 2.1. " Transaction Documents " means, collectively, this Agreement, the Investor Rights Agreement, the Amended and Restated Certificate of Incorporation, the Acquisition Agreement and all other documents executed in connection with this Agreement and the transactions contemplated hereby. " Unauthorized Code " means any virus, trojan horse, worm, or other software routines or hardware components designed to permit unauthorized access, or to disable, erase, or otherwise harm, any computer, systems or Software. " Use " means to use, reproduce, prepare derivative works based upon, distribute, perform, display, make, have made, sell, offer to sell, export, import, license, sublicense and otherwise exploit. " WARN Act " has the meaning set forth in Section 3.17. 2.1 Purchase and Sale of Series 3 Preferred . Subject to the terms and conditions herein set forth, at the Closing (as defined below), the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, on the Closing Date (as defined below) the aggregate number of shares of Series 3 Preferred set forth opposite such Purchaser's name on Schedule 2.1, for the aggregate purchase price set forth opposite such Purchaser's name on Schedule 2.1 (the " Transaction ") (all of the shares of Series 3 Preferred being purchased pursuant hereto at the Closing being referred to herein as the " Purchased Stock "). 2.2 Amended and Restated Certificate of Incorporation . The Purchased Stock shall have the preferences and rights set forth in the Amended and Restated Certificate of Incorporation. 2.3 Use of Proceeds . The Company shall use the proceeds from the sale of the Purchased Stock to the Purchaser (a) to complete the Acquisition and (b) for general corporate purposes. 2.4 Closing . Subject to the satisfaction or waiver of the conditions set forth in Articles V and VI, the subscription for and issuance of the Purchased Stock (the " Closing ") shall take place at the offices of Cooley Godward LLP, Broomfield, Colorado, at 10:00 a.m., local time, on the date hereof, or at such other time and place as the parties may agree in writing (the " Closing Date "). At the Closing, the Company will deliver to the Purchaser a certificate or certificates in definitive form and registered in the name of each such Purchaser representing its Purchased Stock against delivery by the Purchaser to the Company or its agent of the aggregate purchase price therefor, by certified check or wire transfer. 7 The Company represents and warrants to the Purchaser, except as set forth on the Disclosure Schedule delivered herewith, as follows: 3.1 Corporate Existence and Power . The Company and each of its Subsidiaries (a) is an entity duly incorporated, organized or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, as the case may be; (b) has all requisite power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently, or is proposed to be, engaged; (c) is duly qualified, licensed and in good standing under the laws of each jurisdiction in which its ownership, lease or operation of property or the conduct of its business requires such qualification and (d) with respect to the Company only, has the power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Transaction Documents. 3.2 Authorization; No Contravention . The execution, delivery and performance by the Company of this Agreement and each of the other Transaction Documents and the transactions contemplated hereby and thereby (a) have been duly authorized by all necessary action of each such entity; (b) do not contravene the terms of the Amended and Restated Certificate of Incorporation or the Bylaws or the comparable governing documents of any such entity; (c) do not violate, conflict with or result in any breach, default or contravention of (or with due notice or lapse of time or both result in any breach, default or contravention of), or the creation of any Lien (other than Permitted Liens) under, any Contractual Obligation of the Company or any of its Subsidiaries or any Requirement of Law applicable to the Company or any of its Subsidiaries; (d) do not give rise to any right of another party to any Contractual Obligation to accelerate, terminate or otherwise modify such Contractual Obligation with respect to the Company or any of its Subsidiaries; and (e) do not violate any material judgment, injunction, writ, award, decree or order of any nature (collectively, " Orders ") of any Governmental Authority against, or binding upon the Company or any of its Subsidiaries. 3.3 Governmental Authorization; Third Party Consents . No approval, consent, compliance, exemption, authorization, confirmation, transfer or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the sale, issuance and delivery of the Purchased Stock) by, or enforcement against the Company or any Subsidiary of the Company of this Agreement and the other Transaction Documents or the transactions contemplated hereby and thereby. 3.4 Binding Effect . This Agreement and, as applicable, each of the other Transaction Documents has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 3.5 Litigation . Except as set forth on Schedule 3.5 , there are no actions, suits, proceedings, claims, complaints, disputes, arbitrations or investigations (collectively, " Claims ") pending or, to the Knowledge of the Company, threatened, at law, in equity, in arbitration or before any Governmental Authority against or involving the Business, the Company or any of its Subsidiaries nor to the Knowledge of the Company is there any basis for any of the foregoing. The foregoing includes, without limitation, Claims pending or, to the Knowledge of the Company, threatened or any basis therefor known by the Company involving the prior employment of any of the employees of the Business, the 8 Company or any of its Subsidiaries, their use in connection with the business of such entity of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers. No Order has been issued by any court or other Governmental Authority against the Company, any of its Subsidiaries or any of the Assets purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any of the other Transaction Documents. 3.6 Compliance with Laws; Permits . (a) The Company and each of its Subsidiaries is in compliance in all material respects with all Requirements of Law and all Orders issued by any court or Governmental Authority against or affecting the Business, such entity or its assets. To the Knowledge of the Company, there is no existing or proposed Requirement of Law which could reasonably be expected to prohibit or restrict the Company or any of its Subsidiaries from, or otherwise materially adversely effect the Company or any of its Subsidiaries in, conducting the Business in any jurisdiction in which it conducts the Business. (b) Schedule 3.6 sets forth all material licenses, permits, registrations and approvals of any Governmental Authority (collectively, " Permits ") that are necessary or required for the conduct of the Business. Except as set forth on Schedule 3.6 , the Company or, as applicable, its Subsidiaries hold such Permits and have made all filings necessary for the conduct of their Business and such Permits are in full force and effect, and no material violations or notices of any violations or deficiencies are or have been received or recorded in respect of any Permit. 3.7 Capitalization . (a) Company . (i) The authorized capital stock of the Company consists of (A) 100,000,000 shares of Common Stock and (B) 35,500,000 shares of Preferred of which (w) 10,000,000 shares are designated Series 1 Preferred, (x) 18,000,000 shares are designated Series 2 Preferred, (y) 7,500,000 shares are designated Series 3 Preferred and (z) no shares are undesignated "blank check" preferred stock. As of the date hereof and after giving effect to all of the transactions contemplated by any of the Transaction Documents including, without limitation, the Acquisitions, (1) 112,674 shares of Common Stock shall be issued and outstanding, (2) 9,035,548 shares of Series 1 Preferred (which shares as of the date hereof and after giving effect to the Transaction are convertible into an aggregate of 9,035,548 shares of Common Stock) shall be issued and outstanding, (3) 15,000,000 shares of Series 2 Preferred (which shares as of the date hereof and after giving effect to the Transaction are convertible into an aggregate of 4,580,153 shares of Common Stock) shall be issued and outstanding, (3) 6,125,000 shares of Series 3 Preferred (which shares as of the date hereof and after giving effect to the Transaction are convertible into an aggregate of 6,125,000 shares of Common Stock) shall be issued and outstanding, (4) options to purchase an aggregate of 2,847,114 shares of Common Stock shall be issued and outstanding under the Option Plans, (5) Common Stock Warrants to purchase an aggregate of 139,910 shares of Common Stock shall be issued and outstanding, (6) Series 1 Warrants to purchase an aggregate of 776,395 shares of Series 1 Preferred (which shares as of the date hereof and after giving effect to the Transaction would be convertible into an aggregate of 776,395 shares of Common Stock) shall be issued and outstanding, (7) Series 2 Warrants to purchase an aggregate of 2,840,000 shares of Series 2 Preferred (which shares as of the date hereof and after giving effect to the Transaction would be convertible into an aggregate of 867,176 shares of Common Stock) shall be issued and outstanding, (8) Series 3 Warrants to purchase an aggregate of 125,000 shares of Common Stock (which shares as of the date hereof and after giving effect to the Transaction would be convertible into an aggregate of 125,000 shares of Common Stock) shall be issued 9 and outstanding, (9) $31,764,285 in original principal amount of promissory notes convertible into an aggregate of 5,952,880 shares of Common Stock (assuming an IPO implying a pre-money valuation of $150,000,000 for the Company's outstanding equity that occurs immediately following the Closing, and assuming the grant of all options that may be granted under any stock option plan in place at the Closing and the exercise thereof and the conversion, exercise or exchange of all Stock Equivalents outstanding as of the Closing into shares of Common Stock, including, without limitation, all of the shares of Purchased Stock). Schedule 3.7(a)(i) sets forth (x) every warrant, option and other Stock Equivalent of the Company, along with the strike prices, exercise prices or other conversion or exchange price or ratio applicable thereto, and except as set forth in such Schedule, no anti-dilution protection provisions apply to such warrants, options or other Stock Equivalents of the Company and (y) the pro forma capitalization of the Company assuming IPOs implying a pre-money valuation of $150,000,000 for the Company's outstanding equity that occurs immediately following the Closing, and assuming the grant of all options that may be granted under any stock option plan in place as of the Closing and the exercise thereof and the conversion, exercise or exchange of all Stock Equivalents outstanding as of the Closing into shares of Common Stock, including, without limitation, all of the shares of Purchased Stock. The Company has reserved (x) the number of shares of Common Stock, Series 1 Preferred, Series 2 Preferred and Series 3 Preferred required for the issuance upon exercise, conversion or exchange, as the case may be, of all outstanding shares of Series 1 Preferred, shares of Series 2 Preferred, shares of Series 3 Preferred, Common Stock Warrants, Series 1 Warrants, Series 2 Warrants, Series 3 Warrants and other Stock Equivalents of the Company (assuming an IPO implying a pre-money valuation of $150,000,000 for the Company's outstanding equity that occurs immediately following the Closing, and assuming the grant of all options that may be granted under any stock option plan in place as of the Closing and the exercise thereof and the conversion, exercise or exchange of all Stock Equivalents outstanding as of the Closing into shares of Common Stock, including, without limitation, all of the shares of Purchased Stock) and (y) the number of shares of Common Stock required for issuance upon the conversion of the shares of Series 1 Preferred, Series 2 Preferred (assuming an IPO implying a pre-money valuation of $150,000,000 for the Company's outstanding equity that occurs immediately following the Closing, and assuming the grant of all options that may be granted under any stock option plan in place as of the Closing and the exercise thereof and the conversion, exercise or exchange of all Stock Equivalents outstanding as of the Closing into shares of Common Stock, including, without limitation, all of the shares of Purchased Stock) and Series 3 Preferred (assuming an IPO implying a pre-money valuation of $150,000,000 for the Company's outstanding equity that occurs immediately following the Closing, and assuming the grant of all options that may be granted under any stock option plan in place as of the Closing and the exercise thereof and the conversion, exercise or exchange of all Stock Equivalents outstanding as of the Closing into shares of Common Stock, including, without limitation, all of the shares of Purchased Stock) that are to be issued upon conversion of Series 1 Warrants, Series 2 Warrants and Series 3 Warrants, respectively. (ii) Schedule 3.7(a)(i) sets forth, as of the Closing Date and after giving effect to all of the transactions contemplated by any of the Transaction Documents, a true, correct and complete list of (1) the stockholders of the Company (including any trust or escrow agent arrangement created in connection with any employee stock option plan), their principal place of residence, and, opposite the name of each stockholder, the amount of all outstanding capital stock and Stock Equivalents of the Company owned by such stockholder and (2) the holders of Stock Equivalents of the Company (who are not otherwise listed pursuant to clause (1) above), their principal place of residence as set forth in the books are records of 10 the Company, and, opposite the name of each holder, the amount of all Stock Equivalents of the Company held by such holder. (iii) As of the Closing Date and after giving effect to all of the transactions contemplated by any of the Transaction Documents, except as set forth on Schedule 3.7(a)(ii) , there are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire (1) any authorized but unissued, unauthorized or treasury shares of the Company's capital stock, (2) any Stock Equivalents of the Company, or (3) any other securities of the Company and there are no commitments, contracts, agreements, arrangements or understandings by the Company or any of its Subsidiaries to issue any shares of the Company's capital stock, any Stock Equivalents of the Company or any other securities of or any proprietary interest in the Company. (iv) The Purchased Stock will, as of the Closing Date, have been duly authorized, and when issued and sold to the Purchaser after payment therefor, will be validly issued, fully paid and non-assessable and not subject to any preemptive or similar rights, will be issued in compliance with all applicable federal, state and foreign securities laws and will be free and clear of all other Liens (other than those Liens imposed by the Investor Rights Agreement and Liens caused or created by the actions of the Purchaser or otherwise unrelated to the actions of the Company). The shares of Common Stock currently issuable upon conversion of the Purchased Stock have been duly reserved for issuance upon conversion of the Purchased Stock and, when issued in compliance with the provisions of the Amended and Restated Certificate of Incorporation, will be validly issued, fully paid and non-assessable and not subject to any preemptive rights or similar rights and will be free and clear of all other Liens (other than those Liens imposed by the Investor Rights Agreement). All of the issued and outstanding shares of Common Stock, Series 1 Preferred and Series 2 Preferred are, and will at Closing be, duly authorized, validly issued, fully paid and non-assessable, and were issued in material compliance with all applicable federal, state and foreign securities laws. (b) Subsidiaries . (i) Schedule 3.7(b) sets forth, as of the Closing Date and after giving effect to all of the transactions contemplated by any of the Transaction Documents, a true, correct and complete list of (1) each of the Subsidiaries, (2) the aggregate number of authorized shares of capital stock of such Subsidiary, (3) the stockholders of such Subsidiary (including any trust or escrow agent arrangement created in connection with any employee stock option plan of such Subsidiary) and, opposite the name of each stockholder, the amount of all outstanding capital stock and Stock Equivalents owned by such stockholder and (4) the holders of Stock Equivalents of such Subsidiary (who are not otherwise listed pursuant to clause (3) above), their principal place of residence, and, opposite the name of each such holder, the amount of all Stock Equivalents of such Subsidiary owned by such holder. The Company owns all of the issued and outstanding capital stock of the Subsidiaries, free and clear of all Liens. All of such shares of capital stock are duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with all applicable federal, state and foreign securities laws. (ii) As of the Closing Date and after giving effect to all of the transactions contemplated by any of the Transaction Documents, except as set forth on Schedule 3.7(b) , there are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire (1) any authorized but unissued, unauthorized or treasury shares of capital stock of any of the Subsidiaries, (2) any Stock Equivalents of such Subsidiaries, (3) any other securities of such Subsidiaries and (4) there are no commitments, contracts, agreements, arrangements or understandings by the Company or 11 any of its Subsidiaries to issue any shares of the Subsidiaries' capital stock, any Stock Equivalents of the Subsidiaries or other securities of the Subsidiaries (iii) Except as set forth on Schedule 3.7(b) , neither the Company nor any of its Subsidiaries, owns any interest, or has a right to acquire any interest, in any Person that is not a Subsidiary. (c) On the Closing Date after giving effect to all of the transactions contemplated by the Transaction Documents and any anti-dilution adjustment triggered thereby), the Purchased Stock to be purchased by the Purchaser hereunder will represent, in the aggregate, on the date of the Closing, not less than 4.2% and 3.9% of the outstanding shares of Common Stock, respectively, assuming the grant of all options that may be granted under any stock option plan and the exercise thereof and the conversion, exercise or exchange of all Stock Equivalents into shares of Common Stock, including, without limitation, all of the shares of Purchased Stock, and assuming a conversion of all shares of the Company's Preferred Stock into Common Stock based on IPOs with IPO Prices of $5.00 and $10.00 that occurs, in each case, immediately following the Closing. 3.8 No Default or Breach; Contractual Obligations . Neither the Company nor any of its Subsidiaries has received notice of a default under and no such entity is in default under, or with respect to, any Contractual Obligation which relates to the Business and/or to which the Company or any of its Subsidiaries is a party and no condition exists that with notice or lapse of time or both could constitute a default or cause the acceleration of any of the obligations of any such entity thereunder, except where such default would not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect. Schedule 3.8 lists all of the Contractual Obligations to which the Company or any of its Subsidiaries is a party or which otherwise relate to the Business (i) which involve an amount in excess of $75,000 in remaining obligations as of the date hereof; (ii) under which the Company or any of its Subsidiaries agrees to indemnify any party or to share Tax liability of any party; (iii) which restrict or prevent the Company or any of its Subsidiaries from competing in any line of business or with any Person in any geographical area or which restrict or prevent any other Person from competing with the Company or any of its Subsidiaries in any line of business or in any geographical area; (iv) relating to the acquisition by the Company or any of its Subsidiaries of any operating business or any shares of capital stock of any other Person; (v) relating to Indebtedness in excess of $50,000; (vi) containing obligations or liabilities of any kind to holders of the shares of the Company or any of its Subsidiaries as such (including an obligation to register any of such securities under any foreign, federal or state securities laws); (vii) providing for the payment by the Company or any of its Subsidiaries of royalties, profits or similar payments to any other Person that could reasonably be expected to exceed $50,000; (viii) which restrict or prevent the Company or any of its Subsidiaries from declaring or paying dividends or declaring or making other distributions to any holder of shares of capital stock of such entity; or (ix) which are otherwise material to the Business or the Condition of the Company. The Company has heretofore delivered to, or caused to be delivered to, the Prior Purchasers true, correct and complete copies of all documents memorializing any and all of the Contractual Obligations (including all modifications, amendments and supplements) described in the immediately preceding sentence. All of such Contractual Obligations are valid, in full force and effect and binding upon the Company or one of its Subsidiaries, as the case may be, and the other parties thereto. To the Knowledge of the Company, no other party to any such Contractual Obligation is in material default or breach thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default or breach by such other party thereunder or give any party thereto a right to accelerate, terminate or modify such Contractual Obligation. The Company or its Subsidiaries, as applicable, will continue to be entitled to all benefits under such Contractual Obligations following the Closing. 12 (a) Ownership of Real Estate . Neither the Company nor any Subsidiary thereof is the owner of or has any ownership interest in any real property nor has the Company or any Subsidiary thereof entered into any agreement to acquire any such interest. (b) Leased Properties . Schedule 3.9 sets forth a true, correct and complete list of all leases, subleases, licenses and other agreements (collectively, the " Real Property Leases ") under which the Company or any Subsidiary uses or occupies or has the right to use or occupy, now or in the future, any real property used in or related to the Business (the land, buildings and other improvements covered by the Real Property Leases being herein called the " Leased Real Property "), which Schedule 3.9 sets forth (i) the date of and parties to each Real Property Lease, (ii) the date of and parties to each amendment, modification and supplement thereto, (iii) the term and renewal terms (whether or not exercised) thereof, (iv) the annual rent payable thereunder and (v) a brief description of the Leased Real Property covered thereby. The Company has heretofore delivered to, or caused to be delivered to, the Prior Purchasers true, correct and complete copies of all Real Property Leases (including all modifications, amendments and supplements). Each Real Property Lease is valid, binding and in full force and effect, all rent and other sums and charges payable by the Company and its Subsidiaries as tenant thereunder are current, no notice of default or termination under any Real Property Lease is outstanding, and no termination event or condition or uncured default on the part of the Company or any of its Subsidiaries or, to the Knowledge of the Company, the landlord, exists under any Real Property Lease. (c) Entire Premises . The Leased Real Property constitutes all of the real property (including buildings, structures and improvements) used in the Business. 3.10 Charter Documents and Corporate Records . The Company has heretofore delivered to the Prior Purchasers true, correct and complete copies of the certificates of incorporation (certified by the Secretaries of State or other appropriate official of their respective jurisdictions of incorporation) and by-laws, or comparable instruments, of the Company and each of the Subsidiaries as in effect on the date hereof. The minute books, or comparable records, of the Company and each of the Subsidiaries heretofore have been delivered to the Prior Purchasers for their inspection and contain true, correct and complete records of all meetings and consents in lieu of meeting of the Board of Directors (and any committee thereof) and stockholders of the Company and each of the Subsidiaries since the time of the Company's organization or any such Subsidiary's organization, as the case may be, and accurately reflect all transactions referred to in such minutes and consents in lieu of meeting. True and complete copies of the stock books, or comparable records, of the Company and each of the Subsidiaries heretofore have been delivered to the Prior Purchasers for their inspection. The Company has heretofore delivered to the Purchaser true, correct and complete copies of the Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on October 13, 2005. 3.11 Financial Statements . The Purchaser has received (a) the audited financial statements of the Company (balance sheet and statements of operations, cash flow and stockholders' equity, together with the notes thereto) for the fiscal years ended December 31, 2002 and December 31, 2003 which contain an auditors' report of Ernst & Young LLP (the " Company Audited Financial Statements "), the draft audited financial statements of the Company (balance sheet and statements of operations, cash flow and stockholders' equity, together with the notes thereto) for the fiscal year ended December 31, 2004 (December 31, 2004, the " Balance Sheet Date "), and unaudited consolidated financial statements of the Company (balance sheet and statement of operations) for the six months ended June 30, 2005 and for each of the months ended July 31, 2005 and August 31, 2005 (the " Company Unaudited Financial Statements " and, together with the Company Audited Financial Statements, the " Company 13 Financial Statements "); (b) the audited consolidated financial statements of ISx (balance sheet and statements of operations, cash flow and stockholders' equity, together with the notes thereto) for the fiscal years ended December 31, 2003 and December 31, 2004, which contain the unqualified auditors' report of Ernst & Young LLP (the " ISx Financial Statements "); (c) the audited financial statements (balance sheet and statements of operations, cash flow and stockholders' equity, together with the notes thereto) of YPS for the year ended December 31, 2003 and for the nine months ended September 30, 2004 which contain the unqualified auditors' report of Legiere & Materne APAC (collectively, the " YPS Audited Financial Statements ") and the unaudited financial statements of YPS (balance sheet and statements of operations) for the year ended December 31, 2004 (the " YPS Unaudited Financial Statements " and together with the YPS Audited Financial Statements, the " YPS Financial Statements "); (d) the audited financial statements of MAG (balance sheet and statements of operations, cash flow and stockholders' equity, together with the notes thereto) for the fiscal years ended December 31, 2003 and December 31, 2004 which contain the unqualified auditors' report of Grant Thornton LLP (the " MAG Audited Financial Statements ") and the unaudited financial statements (balance sheet and statement of operations) of MAG for the six months ended June 30, 2005 and for each of the months ended July 31, 2005 and August 31, 2005 (the " MAG Unaudited Financial Statements " and, together with the MAG Audited Financial Statements, the " MAG Financial Statements "); and (e) the unaudited pro forma consolidated financial statements of the Company after giving effect to all of the transactions contemplated by the Transaction Documents including, without limitation, the YPS and ISx transac | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AGREEMENTS / CONTRACTS
CLAUSES
| Get Email Updates |
