<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 1)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
GOTO.COM, INC.
-----------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.0001 par value per share
-----------------------------------------------------------------
(Title of Class of Securities)
38348T107
-----------------------------------------------------------------
(CUSIP Number)
Todd Tappin
Chief Financial Officer
GoTo.Com, Inc.
140 West Union Street
Pasadena, California 91103
(626) 685-5600
-----------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JANUARY 17, 2000
------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is subject of this Schedule 13D,
and is filing this statement because of Rule 13d-1(b)(3) or (4),
check the following box:/ /.
(Continued on the following page)
Page 1 of 10 Pages
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 13D
<S> <C> <C>
- ----------------------------------------------- ----------------------------------------------
CUSIP NO. 38348T107 PAGE 2 OF 10
- ----------------------------------------------- ----------------------------------------------
- -------- -----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
BILL GROSS' IDEALAB!
TAX I.D. NO. 95-4569774
- -------- -----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
- -------- -----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- -------- -----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -------- -----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------- -----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- ------------------------ ------ ------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,174,449 SHARES
BENEFICIALLY
OWNED BY EACH ------ ------------------------------------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH 0
------ ------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
4,174,449 SHARES
------ ------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------- -----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,174,449 SHARES
- -------- -----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- -------- -----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.2%
- -------- -----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 13D
<TABLE>
<CAPTION>
<S><C> <C>
- ----------------------------------------------- ----------------------------------------------
CUSIP NO. 38348T107 PAGE 3 OF 10
- ----------------------------------------------- ----------------------------------------------
- -------- -----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IDEALAB! HOLDINGS, L.L.C.
TAX I.D. NO. 95-4729649
- -------- -----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
- -------- -----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- -------- -----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -------- -----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------- -----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ------------------------ ------ ------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 9,192,882 SHARES
OWNED BY EACH
REPORTING ------ ------------------------------------------------------------------------------------
PERSON WITH 8 SHARED VOTING POWER
0
------ ------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
9,192,882 SHARES
------ ------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------- -----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,192,882 SHARES
- -------- -----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- -------- -----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.2%
- -------- -----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- -------- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Page 4 of 10
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of common stock, par value
$0.0001 per share (the "Common Stock"), of GoTo.Com, Inc., a Delaware
corporation (the "Company"). The principal executive offices of the Company are
located at 140 West Union Street, Pasadena, California 91103.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed jointly by Bill Gross'
idealab!, a California corporation ("Idealab Co."), and idealab! Holdings,
L.L.C., a Delaware limited liability company and a wholly-owned subsidiary of
Idealab Co. ("Idealab Holdings," and together with Idealab Co., the "Reporting
Persons").
(b) The address of the Reporting Persons' principal office
is 130 West Union Street, Pasadena, California 91103. The names, business
addresses and principal businesses of each of the directors and executive
officers of each of the Reporting Persons are set forth on SCHEDULE I hereto and
incorporated by reference herein.
(c) The principal business of each of the Reporting
Persons is the creation and operation of internet businesses.
(d) During the last five years, neither of the Reporting
Persons nor, to the best of their knowledge, any of the executive officers or
directors of either of the Reporting Persons, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither of the Reporting
Persons nor, to the best of their knowledge, any of the executive officers or
directors of either of the Reporting Persons, has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and,
as a result of such proceeding, was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) To the best knowledge of the Reporting Persons, each of
the executive officers and directors of each of the Reporting Persons is a
United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
See Item 4 below.
ITEM 4. PURPOSE OF TRANSACTION.
On December 23, 1999, Idealab Co. entered into agreements to
purchase an aggregate of 4,074,449 shares of Common Stock from eight
stockholders of the Company in exchange for an aggregate consideration of
$332,255,920 in cash. On January 17, 2000, Idealab Co. entered in an agreement
to purchase 100,000 shares of Common Stock from idealab! Capital Partners I-B,
L.P., a Delaware limited partnership, for $8,000,000 in cash. Upon consummation
of such stock purchases contemplated in the stock purchase agreements, Idealab
Co. will own approximately 9.2% of the total shares of Common Stock outstanding
(which excludes the shares of Common Stock held directly and beneficially by
Idealab Holdings and which is based on 45,532,469 shares of Common Stock
outstanding
<PAGE>
Page 5 of 10
on September 30, 1999). Consummation of such purchases of shares of
Common Stock is conditioned on the expiration or termination of the waiting
period imposed under the Hart-Scott-Rodino Improvements Act of 1976, as amended.
The agreements evidencing such stock purchase transactions are attached hereto
as Exhibits 2-10 (the "Stock Purchase Agreements") and incorporated by reference
herein. The source of the cash consideration to be paid in the stock purchase
transactions is working capital of Idealab Co. Following Idealab Co.'s
consummation of such stock purchase transactions, Idealab Co. will contribute
all of the newly acquired shares of Common Stock to Idealab Holdings.
All of the shares of Common Stock reported herein were
acquired for investment purposes. The Reporting Persons may acquire or dispose
of securities of the Company, including shares of Common Stock, directly or
indirectly, in open-market or privately negotiated transactions, depending upon
the Reporting Persons' evaluation of the performance and prospects of the
Company, and upon other developments and circumstances, including, but not
limited to, general economic and business conditions, stock market conditions
and the interpretation of the factors which cause a company to qualify as an
investment company under the Investment Company Act of 1940, as amended.
Except as described herein, the Reporting Person has no
present plan or proposal which relates to, or could result in, any of the events
referred to in paragraphs (a) through (j), inclusive, of Item 4 of Schedule 13D.
However, the Reporting Person will continue to review the business of the
Company and, depending upon one or more of the factors referred to above, may in
the future propose that the Company take one or more of such actions.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date hereof, Idealab Holdings is the direct
record and beneficial owner of 9,192,882 shares of Common Stock, which
constitute approximately 20.2% of the 45,532,469 outstanding shares of Common
Stock as of September 30, 1999. Pursuant to the consummation of the stock
purchase transactions described herein, Idealab Co. may be deemed to
beneficially own 4,174,449 additional shares of Common Stock, which constitute
approximately 9.2% of the 45,532,469 outstanding shares of Common Stock as of
September 30, 1999. Following Idealab Co.'s consummation of the stock purchase
transactions contemplated by the Stock Purchase Agreements, Idealab Co. will
contribute all of the newly acquired shares of Common Stock to Idealab Holdings,
at which point Idealab Holdings will be the direct and beneficial owner of
13,367,331 shares of Common Stock, which constitute approximately 29.4% of the
45,532,469 outstanding shares of Common Stock as of September 30, 1999. As of
January 17, 2000, certain executive officers and directors of the Reporting
Persons owned an aggregate of approximately 439,731 shares of Common Stock. The
Reporting Persons disclaim any beneficial interest in such shares.
(b) The Reporting Persons have sole power to vote or direct
the vote, and to dispose or to direct the disposition of the 13,367,331 shares
of Common Stock that they own of record or may be deemed to beneficially own.
(c) Except as described in Item 4 above, there have not
been any transactions in the shares of Common Stock effected by or for the
account of either of the Reporting Persons or any executive officer or director
of either of the Reporting Persons during the past 60 days.
<PAGE>
Page 6 of 10
(d) Except as stated in this Item 5, to the best knowledge
of the Reporting Persons, no other person has the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock owned of record or beneficially owned by either of the
Reporting Persons.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
See Item 4.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1.* Joint Filing Agreement, dated as of January 3, 2000.
Exhibit 2.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Kline
Hawkes California SBIC.
Exhibit 3.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Howard
L. Morgan.
Exhibit 4.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and
Oliver A. McBryan.
Exhibit 5.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Bob
Kavner.
Exhibit 6.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and
William S. Elkus.
Exhibit 7.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Bruce
Hendricks.
Exhibit 8.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Moore
Global Investments, Ltd., Multi-Strategies Fund
Ltd., Remington Investments Strategies, L.P. and
Multi-Strategies Fund L.P.
Exhibit 9.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Jim
Armstrong.
Exhibit 10. Stock Purchase Agreement, dated as of January 17,
2000, by and between Bill Gross' idealab! and
idealab! Capital Partners I-B, L.P.
* Previously filed on Schedule 13D, dated December 23, 1999.
<PAGE>
Page 7 of 10
SIGNATURES
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
Dated: January 20, 2000 BILL GROSS' IDEALAB!
By: /s/ Bill Gross
-------------------------
Name: Bill Gross
Title: Chairman of the Board
and President
Dated: January 20, 2000 IDEALAB! HOLDINGS, L.L.C.
By: /s/ Bill Gross
-------------------------
Name: Bill Gross
Title: Managing Member
<PAGE>
Page 8 of 10
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
BILL GROSS' IDEALAB!
The name, business address, present principal occupation or
employment, and the name, principal business and address of any corporation or
other organization in which such employment is conducted, of each of the
directors and executive officers of Bill Gross' idealab! is set forth below.
Unless otherwise indicated below, the business address of each director and
executive officer is Bill Gross' idealab!, 130 West Union Street, Pasadena,
California 91103.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, IF OTHER THAN AS
NAME AND BUSINESS POSITION WITH BILL GROSS' EXECUTIVE OFFICER OF BILL GROSS'
ADDRESS IDEALAB! IDEALAB!
----------------------------------- ---------------------------------- ----------------------------------------
<S> <C> <C>
Bill Gross Chairman of the Board and
President
Lawrence Gross Vice-Chairman and Director
Robert Kavner Vice-Chairman and Director
Howard Morgan Vice-Chairman and Director
Thomas Hughes Director
Marcia Goodstein Vice-Chairman,
Chief Operating Officer and
Director
Bradley O. Ramberg Vice-President and
Chief Fiancial Officer
Douglas McPherson Vice-President and
General Counsel
</TABLE>
<PAGE>
Page 9 of 10
DIRECTORS AND EXECUTIVE OFFICERS OF
IDEALAB! HOLDINGS, L.L.C.
The name, business address, present principal occupation or
employment, and the name, principal business and address of any corporation or
other organization in which such employment is conducted, of each of the
directors and executive officers of idealab! Holdings, L.L.C. is set forth
below. Unless otherwise indicated below, the business address of each director
and executive officer is idealab! Holdings, L.L.C., 130 West Union Street,
Pasadena, California 91103.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL OCCUPATION, IF OTHER THAN AS
NAME AND BUSINESS POSITION WITH IDEALAB! HOLDINGS, EXECUTIVE OFFICER OF IDEALAB!
ADDRESS L.L.C. HOLDINGS, L.L.C.
----------------------------------- ---------------------------------- ----------------------------------------
Bill Gross' idealab! Member
Bill Gross Managing Member
</TABLE>
<PAGE>
Page 10 of 10
EXHIBIT INDEX
Exhibit 1.* Joint Filing Agreement, dated as of January 3, 2000.
Exhibit 2.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Kline
Hawkes California SBIC.
Exhibit 3.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Howard
L. Morgan.
Exhibit 4.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Oliver
A. McBryan.
Exhibit 5.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Bob
Kavner.
Exhibit 6.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and
William S. Elkus.
Exhibit 7.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Bruce
Hendricks.
Exhibit 8.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Moore
Global Investments, Ltd., Multi-Strategies Fund
Ltd., Remington Investments Strategies, L.P. and
Multi-Strategies Fund L.P.
Exhibit 9.* Stock Purchase Agreement, dated as of December 23,
1999, by and between Bill Gross' idealab! and Jim
Armstrong.
Exhibit 10. Stock Purchase Agreement, dated as of January 17,
2000, by and between Bill Gross' idealab! and
idealab! Capital Partners I-B, L.P.
* Previously filed on Schedule 13D, dated December 23, 1999.
<PAGE>
EXHIBIT 10
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("AGREEMENT") is made as of January
17, 2000 between Bill Gross' idealab!, a California corporation ("BUYER"), and
idealab! Capital Partners I-B, L.P., a Delaware limited partnership ("SELLER").
RECITALS
Seller desires to sell, and Buyer desires to purchase, 100,000
shares (together with all contractual rights of Seller in such shares, the
"SHARES") of common stock, $.0001 par value per share, of GoTo.com, Inc., a
Delaware corporation (the "COMPANY"), for the consideration and on the terms set
forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. SALE OF SHARES; CLOSING
1.1 SALE OF SHARES
Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller, in exchange for Buyer delivering to Seller
$8,000,000 in cash (the "PURCHASE CONSIDERATION").
1.2 CLOSING
The purchase and sale provided for in this Agreement will take
place (the "CLOSING") at the offices of Latham & Watkins, at 633 West Fifth
Street, Los Angeles, California, 90071, concurrent with the closing of those
certain Stock Purchase Agreements between (a) Buyer and Moore Global
Investments, Ltd., Multi-Strategies Fund Ltd., Remington Investments Strategies,
L.P., and Multi-Strategies Fund L.P., (b) Buyer and Kline Hawkes California
SBIC, (c) Buyer and Bob Kavner, (d) Buyer and Oliver A. McBryan, (e) Buyer and
William S. Elkus, (f) Buyer and Bruce Hendricks, (g) Buyer and Howard L. Morgan,
and (h) Buyer and Jim Armstrong, all dated as of December 23, 1999, or at such
other time and place as the parties may agree (the "CLOSING DATE"). Subject to
the provisions of Section 7, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 1.2 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
1.3 CLOSING OBLIGATIONS
At the Closing:
(a) Seller will deliver to Buyer:
1
<PAGE>
(i) the certificates representing the Shares owned
by Seller, duly endorsed (or accompanied by duly executed stock
powers) for transfer to Buyer; and
(ii) a certificate executed by Seller representing
and warranting to Buyer that each of Seller's representations and
warranties in this Agreement was accurate in all respects as of
the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date.
(b) Buyer will deliver to Seller:
(i) $8,000,000 in cash by wire transfer of
immediately available funds in accordance with Seller's written
wiring instructions; and
(ii) a certificate executed by Buyer to the effect
that, except as otherwise stated in such certificate, each of
Buyer's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.1 ORGANIZATION AND GOOD STANDING
Seller is a limited partnership duly organized, validly existing,
and in good standing under the laws of Delaware. Seller has requisite
partnership power and authority to carry on its business as presently conducted
and as proposed to be conducted. Seller is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business, assets, financial
condition, results of operations or properties.
2.2 PARTNERSHIP POWER
Seller has all requisite legal and partnership power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.
2.3 AUTHORIZATION
All partnership action on the part of Seller, its officers and
partners necessary for the authorization, execution, delivery and performance of
this Agreement by Seller and the performance of Seller's obligations under this
Agreement has been taken. Neither the execution, delivery or performance of this
Agreement by Seller nor the consummation or performance of any or all of the
transactions contemplated by this Agreement, including, without limitation, the
sale of the Shares by Seller to Buyer, the performance by Buyer and Seller of
their respective covenants and obligations under this Agreement (including
entering into the Investment Agreements), and Buyer's acquisition and ownership
of the Shares (the "CONTEMPLATED
2
<PAGE>
TRANSACTIONS"), by Seller will give any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or governmental body ("PERSON") the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to: (i)
any provision of Seller's limited partnership agreement or similar document
adopted or filed in connection with the creation, formation, or organization of
Seller, or any amendment to any of the foregoing ("SELLER'S ORGANIZATIONAL
DOCUMENTS"); (ii) any resolution adopted by the partners of Seller; (iii) any
federal, state, local, municipal, foreign, international, multinational, or
other administrative order, constitution, law, ordinance, principle of common
law, regulation, statute or treaty ("LEGAL REQUIREMENT") or any award, decision,
injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made,
or rendered by any court, administrative agency, or other governmental body or
by any arbitrator ("ORDER") to which Seller may be subject; or (iv) any contract
to which Seller is a party or by which Seller may be bound. Seller is not and
will not be required to obtain any consent from any Person in connection with
the execution, delivery and performance of this Agreement.
2.4 COMPLIANCE WITH OTHER INSTRUMENTS
The execution, delivery and performance of and compliance with
this Agreement will not result in any violation of, or conflict with, or
constitute, with or without the passage of time and the giving of notice, a
default under, Seller's limited partnership agreement or any of its agreements
nor result in the creation of, any mortgage, pledge, lien, encumbrance or charge
upon the Shares.
2.5 OWNERSHIP
Seller is and will be on the Closing Date the record and
beneficial owner and holder of its Shares, free and clear of all charges,
claims, community property interests, conditions, equitable interests, liens,
options, pledges, security interests, rights of first refusal, or restrictions
of any kind, including any restriction on use, voting, transfer, receipt of
income, or exercise of any other attribute of ownership ("ENCUMBRANCES"). No
legend or other reference to any purported Encumbrance appears upon any
certificate representing the Shares. There are no contracts relating to the
issuance, sale, or transfer of the Shares.
2.6 BROKERS OR FINDERS
Seller has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by Seller, any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or any other similar payments in connection with this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3
<PAGE>
3.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of California. Buyer has requisite
corporate power and authority to own and operate its properties and assets, and
to carry on its business as presently conducted and as proposed to be conducted.
Buyer is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business, assets, financial condition, results of operations or
properties.
3.2 CORPORATE POWER
Buyer has all requisite legal and corporate power and authority
to execute and deliver this Agreement and to perform its obligations under this
Agreement.
3.3 AUTHORIZATION
All corporate action on the part of Buyer, its officers,
directors and shareholders necessary for the authorization, execution, delivery
and performance of the Agreement by Buyer, and the performance of Buyer's
obligations under the Agreement has been taken. The Agreement, when executed and
delivered by Buyer, shall constitute a valid and binding obligation of Buyer,
enforceable in accordance with its terms.
3.4 COMPLIANCE WITH OTHER INSTRUMENTS
Buyer is not in violation or default of any term of its articles
of incorporation, as amended, or bylaws, as amended, or any term or provision of
any material mortgage, indebtedness, indenture, contract, agreement, instrument,
judgment, order or decree, and to its knowledge is not in violation of any
statute, rule or regulation applicable to Buyer where such violation would have
a material adverse effect on its business, assets, financial condition, results
of operations or properties. The execution, delivery and performance of and
compliance with this Agreement will not result in any violation of, or conflict
with, or constitute, with or without the passage of time and the giving of
notice, a default under, Buyer's articles of incorporation, as amended, or
bylaws, as amended, or any of its agreements nor result in the creation of, any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Buyer; and there is no such violation or default which materially and
adversely affects the business of Buyer or any of its properties or assets.
3.5 BROKERS OR FINDERS
Buyer has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by Buyer, any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or any other similar payments in connection with this Agreement.
4
<PAGE>
3.6 FIRPTA
Buyer is not, and has not been at any time during the five year
period ending on the date of this Agreement, a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Internal
Revenue Code of 1986, as amended.
4. COVENANTS OF BUYER AND SELLER PRIOR TO CLOSING DATE
4.1 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant
to Section 7, Seller will not, and will prevent any director, officer, employee,
agent, consultant, advisor, or other representative of Seller, including legal
counsel, accountants, and financial advisors ("REPRESENTATIVES"), directly or
indirectly, from soliciting, initiating, or encouraging any inquiries or
proposals from, discussing or negotiating with, providing any non-public
information to, or considering the merits of any unsolicited inquiries or
proposals from, any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or governmental body ("PERSON") (other than Buyer) relating to any transaction
involving the sale of the business or assets of the Company, or any of the
capital stock of the Company, or any merger, consolidation, business
combination, or similar transaction involving the Company. Notwithstanding the
foregoing, nothing in this Section 4.1 shall in any way prevent or prohibit any
agent or representative of Seller from taking any action to fulfill his
fiduciary duties as a director of the Company.
4.2 FURTHER ASSURANCES
(a) Subject to the terms and conditions herein, each of the
parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement.
(b) In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of Buyer and Seller shall take
all such necessary action.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
5.1 SELLER'S PERFORMANCE
(a) All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered
5
<PAGE>
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all
material respects.
(b) Each document required to be delivered pursuant to
Section 1.3 must have been delivered, and each of the other covenants
and obligations in Section 4 must have been performed and complied
with in all material respects.
5.2 NO INJUNCTION
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Seller to
Buyer, and (b) has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
5.3 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or threatened by any Person any
claim asserting that such Person (a) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of, the Shares or
(b) is entitled to all or any portion of the Purchase Consideration payable to
Seller for the Shares.
5.4 NO PROHIBITION
Neither the consummation nor the performance of any or all of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), materially contravene, or conflict with, or result in a
material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise formally proposed by or before any
governmental body.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other
actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part):
6.1 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been
performed and complied with in all material respects.
(b) Buyer must have delivered each of the documents required
to be delivered by Buyer pursuant to Section 1.3 and must have
transferred the Purchase Consideration pursuant to Section 1.3(b)(i).
6
<PAGE>
6.2 NO INJUNCTION
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Seller to
Buyer, and (b) has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
7. TERMINATION
7.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing,
be terminated:
(a) by either Buyer or Seller if a material breach of any
provision of this Agreement has been committed by the other party and
such breach has not been waived;
(b) by Buyer if any of the conditions in Section 5 has not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement) and Buyer
has not waived such condition on or before the Closing Date; or (ii)
by Seller, if any of the conditions in Section 6 has not been
satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Seller to comply with their obligations under this Agreement) and
Seller have not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Seller; or
(d) by either Buyer or Seller if the Closing has not
occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before February 28, 2000, or such later date as
the parties may agree upon.
7.2 EFFECT OF TERMINATION
Each party's right of termination under Section 7.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 7.1, all further obligations of
the parties under this Agreement will terminate, except that the obligations in
Section 8.1 will survive; PROVIDED, HOWEVER, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
7
<PAGE>
8. GENERAL PROVISIONS
8.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
8.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines. Unless consented to by Buyer in
advance or required by law, prior to the Closing, Seller shall keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person.
8.3 NOTICES
All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller:
idealab! Capital Partners I-B, L.P.
130 West Union Street
Pasadena, California 91103
Facsimile No.: (310) 573-6277
with a copy to:
James K. Baer
Strategic Law Partners
333 South Grand Avenue, Suite 3970
Los Angeles, California 90071
Facsimile No.: (213) 213-7301
8
<PAGE>
Buyer:
Bill Gross' idealab!
130 West Union Street
Pasadena, California 91103
Attention: General Counsel
Facsimile No.: (626) 535-2703
with a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: David M. Hernand, Esq.
Facsimile No.: (213) 891-8763
8.4 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought against any of
the parties in the courts of the State of California, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
8.5 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
8.6 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect
9
<PAGE>
to its subject matter. This Agreement may not be amended except by a written
agreement executed by the party to be charged with the amendment.
8.7 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights under this Agreement
without the prior consent of the other parties, which will not be unreasonably
withheld, except that Buyer may assign any of its rights under this Agreement to
any subsidiary of Buyer. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
8.8 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
8.9 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
8.10 GOVERNING LAW
This Agreement will be governed by the laws of the State of
California without regard to conflicts of laws principles.
8.11 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
[Signature Page Follows]
10
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Buyer: BILL GROSS' IDEALAB!
By: /s/ Bill Gross
----------------------------
Name: Bill Gross
Title: Chairman of the Board and President
Seller: IDEALAB! CAPITAL PARTNERS I-B, L.P.
By: /s/ William S. Elkus
----------------------------
Name: William S. Elkus
Title: Senior Managing Director
