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EXHIBIT 5.1
THESTREET.COM, INC.
SECURITIES PURCHASE AGREEMENT
DATED AS OF AUGUST 7, 2000
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is entered into as of August 7,
2000, by and among TheStreet.com, Inc., a Delaware corporation (the "Company");
Go2Net, Inc., a Delaware corporation ("Go2Net"); and Vulcan Ventures Inc., a
Washington corporation ("Vulcan," and at times together with Go2Net, the
"Purchasers").
WHEREAS, the Purchasers have indicated a desire to purchase from the
Company 1,340,334 shares of the Company's common stock, $0.01 par value per
share ("Common Stock"); and
WHEREAS, the Company has indicated a desire to sell such shares of
Common Stock to the Purchasers and to grant to each Purchaser an option to
purchase additional shares of Common Stock and the Company has agreed, in
certain cases, to register such securities under the Securities Act (as such
term is defined herein) on the terms set forth herein.
NOW, THEREFORE, for and in consideration of the mutual consents and
agreements herein contained, the parties hereto do hereby covenant and agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE. Subject to the terms and conditions
hereinafter set forth, at the Closing (as defined below) the Company shall issue
and sell to the Purchasers and the Purchasers shall purchase from the Company,
1,340,334 shares (the "Purchased Shares") of the Common Stock, at a price per
share equal to the average of the closing prices for shares of Common Stock sold
on the Nasdaq National Market for each of the ten (10) trading days immediately
prior to the Closing Date (as such term is defined in Section 1.3), which amount
shall equal $5.56 per share, payable as provided in Section 1.3. The number of
Purchased Shares to be purchased by each Purchaser is set forth opposite each
Purchaser's name on Schedule 1.1 attached hereto. The Common Stock shall have
the rights, terms and privileges set forth in the Company's Certificate of
Incorporation. Terms used herein as defined terms that are not defined in the
context hereof shall have the meaning set forth in Article VIII.
1.2 OPTION.
(a) Subject to the terms and conditions hereinafter set
forth and effective as of the Closing, the Company hereby (i) grants Go2Net an
option (the "Go2Net Option") to purchase from it up to an additional number of
shares of Common Stock equal to 7.45% of the then issued and outstanding shares
of Common Stock as of the date of the Option Closing (as such term is defined
herein) (the "Go2Net Option Shares") and (ii) grants Vulcan an option (together
with the Go2Net Option, the "Options") to purchase from it up to an additional
number
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of shares of Common Stock equal to 7.45% of the then issued and
outstanding shares of Common Stock as of the date of the Option Closing
(together with the Go2Net Option Shares, the "Option Shares"), in each case at
an exercise price of $13.50 per share (the "Exercise Price"). The options are
exercisable from the Closing Date and shall expire on the six (6) month
anniversary of the Closing Date (the "Expiration Date"), unless the Call Notice
(as defined below) has been delivered in accordance with Section 1.2(b) prior to
midnight (New York time) on such date, subject to extension as provided in the
last sentence of Section 1.2(b). Purchasers may assign or transfer the Options
only to a Permitted Transferee or with the written consent of the Company, which
shall not unreasonably be withheld.
(b) In order to exercise any Option, the applicable
Purchaser shall give a written notice to the Company of such Purchaser's
election to exercise such Option in whole or in part from time to time (the
"Call Notice") which notice shall state the number of Option Shares as to which
the Option is being exercised. The closing of the purchase and sale of the
applicable Option Shares (an "Option Closing") shall take place at the offices
of the Company ten (10) business days following exercise of the Option, subject
to extension as provided in the last sentence of this Section 1.2(b). At the
applicable Option Closing, the Company shall deliver (i) the applicable Option
Shares in the form of a certificate issued in the applicable Purchaser's name or
the name of any transferee who received the Option in accordance with the last
sentence of Section 1.2(a) (bearing the legend required by Section 4.2 hereof)
together with any other stock or other securities and property (including cash,
where applicable) to which such Purchaser is entitled upon such exercise
pursuant to this Section 1.2 or otherwise and (ii) written confirmation by the
Company that the representatives and warranties of the Company are true and
correct (unless otherwise stated in such written confirmation) as if made on the
date of such Option Closing upon receipt by the Company of payment of (x) the
Exercise Price for each applicable Option Share by or on behalf of such
Purchaser to the Company, and (y) written confirmation by such Purchaser that
the representatives and warranties of such Purchases contained in Section 4.1
hereof are true and correct as if made on the date of such Option Closing.
The Exercise Price shall be paid by certified check or by wire
transfer of immediately available funds to a bank account designated by the
Company.
The obligation of the Company and the applicable Purchaser to
proceed with the Option Closing shall be conditioned upon, and the date
scheduled for the Option Closing and, if necessary, the Expiration Date shall be
extended, if necessary, to ten (10) business days following the last to occur
of, the receipt of all material governmental and regulatory consents, approvals
or waivers, including, without limitation, approvals under the HSR Act, that are
required in connection with the purchase and sale of the applicable Option
Shares.
(c) In case at any time or from time to time, the holders of
Common Stock shall have received, or (on or after the record date fixed for the
determination of stockholders eligible to receive) shall have become entitled to
receive, without payment therefor,
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(i) other or additional stock or other securities or
property (other than cash) by way of dividend, or
(ii) any cash (excluding cash dividends payable solely out
of earnings or earned surplus of the Company), or
(iii) other or additional stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock issued as a stock dividend or in a
stock-split (adjustments in respect of which are provided for in 1.2(e) below),
then and in each such case each Purchaser, on the exercise hereof as provided in
Section 1.2, shall be entitled to receive the amount of stock and other
securities and property (including cash in the cases referred to in clauses (ii)
and (iii) of this Section 1.2(c)) which such Purchaser would hold on the date of
such exercise if on the date hereof such Purchaser had been the holder of record
of the number of shares of Common Stock subject to the Option and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and all such other or additional stock and
other securities and property (including cash in the cases referred to in
clauses (ii) and (iii) of this Section 1.2(c)) receivable by the Purchaser as
aforesaid during such period, giving effect to all adjustments called for during
such period by Section 1.2(e) below.
(d) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER,
ETC.
(i) In case at any time or from time to time,
the Company shall (x) effect a reorganization, (y) consolidate with or merge
into any other person, or (z) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case the Option
shall continue to be in full force and effect and each Purchaser, on the
exercise of the Option as provided in Section 1.2 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution as the case may be, shall receive, if after such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, no shares of Common Stock shall be outstanding
that are identical to the shares of Common Stock outstanding immediately prior
to such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, in lieu of the Common Stock issuable on such
exercise prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which such Purchaser would have been
entitled upon such consummation or in connection with such dissolution, as the
case may be, if such Purchaser had so exercised its Option immediately prior
thereto, all subject to further adjustment thereafter as provided in Sections
1.2(c) and (e). The Company shall cause the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, to agree to
be bound by the terms
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and conditions of the Option, whether or not such person shall have expressly
assumed the terms of the Option.
(ii) In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company (other than in connection with a transaction described in
Section 1.2(d)(i) above), prior to such dissolution, shall at its expense
deliver or cause to be delivered the stock and other securities and property
(including cash, where applicable) receivable by the Purchasers had the Options
been exercised immediately prior to such dissolution, less an amount equal to
the aggregate Exercise Price, after the effective date of such dissolution
pursuant to this Section 1.2(d)(ii) to a bank or trust company having its
principal office in Seattle, Washington, as trustee for the Purchasers.
(e) In the event that the Company shall (i) issue
additional shares of the Common Stock as a dividend or other distribution on
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
or (iii) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 1.2(e). Each
Purchaser shall thereafter, on the exercise hereof as provided in Section 1.2,
be entitled to receive that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock which would otherwise (but for
the provisions of this Section 1.2(e)) be issuable on such exercise by a
fraction of which (i) the numerator is the Exercise Price which would otherwise
(but for the provisions of this Section 1.2(e)) be in effect, and (ii) the
denominator is the Exercise Price in effect on the date of such exercise.
(f) The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Option, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Purchasers
hereunder. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock receivable on the
exercise of the Option above the amount payable therefor on such exercise, (b)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
stock on the exercise of the Option from time to time outstanding, and (c) will
notify Purchasers no later than twenty (20) days prior to the transfer of all or
substantially all of its properties and assets to any other person (corporate or
otherwise), or
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consolidation with or merger with or into any other person, whether or not the
Company is the surviving corporation.
(g) CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock issuable on the
exercise of the Option, the Company at its expense will promptly cause its Chief
Financial Officer or, if a Purchaser so requests, (at such Purchaser's expense)
independent certified public accountants of recognized standing selected by the
Company, to compute such adjustment or readjustment in accordance with the terms
of the Option and prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (i) the consideration received
or receivable by the Company for any additional shares of Common Stock issued or
sold or deemed to have been issued or sold, (ii) the number of shares of Common
Stock outstanding or deemed to be outstanding, and (iii) the Exercise Price and
the number of shares of Common Stock to be received upon exercise of the Option,
in effect immediately prior to such issue or sale and as adjusted and readjusted
as provided herein. The Company will forthwith mail a copy of each such
certificate to each Purchaser, and will, on the written request at any time of
either Purchaser, furnish to such Purchaser a like certificate setting forth the
Exercise Price at the time in effect and showing how it was calculated.
1.3 CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Articles V and VI hereof, a closing (the "Closing") of
the sale and purchase of the Purchased Shares shall take place at the offices of
Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New York, at 10:00
A.M., on August 7, 2000, or such other date, time and place as shall be mutually
agreed upon by the Company and the Purchasers (the "Closing Date"). At the
Closing, the Company will deliver the Purchased Shares being acquired by each
Purchaser in the form of a certificate issued in such Purchaser's name upon
receipt by the Company of payment of the full purchase price therefor by or on
behalf of such Purchaser to the Company by certified check or by wire transfer
of immediately available funds to an account designated in writing by the
Company.
1.4 USE OF PROCEEDS. As an integral part of the purpose and
structure of the financing contemplated herein, the Company shall use the
proceeds received upon the sale of the Purchased Shares at the Closing for
general working capital. It is understood that the Company shall be free to use
such proceeds for any legal corporate purpose; provided, however, that the prior
approval of the Company's board of directors shall be required for any
expenditure which individually is in excess of $500,000.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
In order to induce the Purchasers to purchase the Purchased
Shares and the Option Shares, the Company makes the following representations
and warranties which shall be true, correct and complete in all respects on the
date hereof.
2.1 ORGANIZATION AND CORPORATE POWER. The Company and each of its
Material Subsidiaries is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own its properties and to carry
on its business as presently conducted. The Company and each of its Material
Subsidiaries is duly licensed or qualified to do business as a foreign
corporation in each jurisdiction wherein the character of its property or the
nature of the activities presently conducted by it, makes such qualification
necessary and where the failure to so qualify would have a Material Adverse
Effect.
2.2 AUTHORIZATION. The Company has all necessary corporate power
and has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by the Company of this Agreement and the
Co-Branding and Marketing Agreement and any other agreements or instruments
executed by the Company in connection herewith or therewith (collectively, the
"Related Agreements"), and the consummation by the Company of the transactions
contemplated herein or therein, and for the due authorization, issuance and
delivery of the Purchased Shares and the Option Shares. Sufficient shares of
authorized, but unissued shares of Common Stock have been reserved for issuance
upon exercise of the Option. The issuance of the Purchased Shares do not, and
the Option Shares will not, require any further corporate action and is not and,
in the case of the Option Shares, will not be, subject to any preemptive right,
right of first refusal or similar purchase right. Assuming due execution and
delivery thereof by the other Persons contemplated to be party thereto, this
Agreement and the Related Agreements will each be a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms.
2.3 GOVERNMENT APPROVALS. No consent, approval, license or
authorization of, or designation, declaration or filing with, any court or
governmental authority is or will be required on the part of the Company in
connection with the execution, delivery and performance by the Company of this
Agreement and the Related Agreements, or in connection with the issuance of the
Purchased Shares or the Option Shares upon exercise of the Option, except for
(i) those which have already been made or granted, (ii) the filing of
registration statements with the Securities and Exchange Commission (the
"Commission"), (iii) filings with applicable state securities commission, (iv)
the listing of the Purchased Shares and the Option Shares on the Nasdaq National
Market and (v) the filings under the HSR Act, if required.
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2.4 AUTHORIZED AND OUTSTANDING STOCK.
(a) The authorized capital stock of the Company (immediately
prior to the Closing) consists of 100,000,000 shares of Common Stock and
10,000,000 shares of preferred stock, par value $.01 per share (the "Preferred
Stock"), and 1,000,000 shares of Preferred Stock have been designated as Series
A Junior Participating Preferred Stock.
(b) The issued and outstanding capital stock of the Company
(immediately prior to the Closing) will consist of 25,466,350 shares of Common
Stock. There are no outstanding shares of Preferred Stock, and the Company has
no plans to issue any Preferred Stock. In addition, options to purchase
2,711,049 shares of Common Stock have been granted and are unexercised under the
Amended and Restated 1998 Stock Incentive Plan of TheStreet.com. All of the
issued and outstanding shares of capital stock of the Company are, and when
issued in accordance with the terms hereof, the Purchased Shares and the Option
Shares will be, duly authorized and validly issued and fully paid and
non-assessable, with no personal liability attaching to the ownership thereof.
When issued in accordance with the terms hereof, the Purchased Shares and the
Option Shares will be free and clear of all Liens imposed by or through the
Company, except for restrictions imposed by Federal or state securities or "blue
sky" laws and except for those imposed pursuant to this Agreement. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class or series of capital stock of the Company
are as set forth in the certified Certificate of Incorporation of the Company
delivered under Section 5.6 hereof, and the Certificate of Designation,
Preferences and Rights of Series A Junior Participating Preferred Stock, and all
such designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable in accordance with their terms
and in accordance with applicable law.
(c) Except as set forth in SCHEDULE 2.4(C) hereto or as
provided in this Agreement, (i) no subscription, warrant, option, convertible
security or other right (contingent or otherwise) issued by the Company to
purchase or acquire any shares of capital stock of the Company is authorized or
outstanding, (ii) there is not any commitment of the Company to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock any evidences
of indebtedness or assets of the Company, (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof and (iv) there are no agreements, written
or oral, between the Company and any holder of its capital stock relating to the
acquisition, disposition or voting of the capital stock of the Company. No
person or entity is entitled to (i) any preemptive right, right of first refusal
or similar rights granted by the Company with respect to the issuance of any
capital stock of the Company. Except as set forth on SCHEDULE 2.4(C) and as
provided in Article VII of this Agreement, no person or entity has been granted
rights by the Company with respect to the registration of any capital stock of
the Company under the Securities Act of 1933, as amended (the "Securities Act").
All of the issued and outstanding
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shares of the Company's capital stock have been offered, issued and sold by the
Company in compliance with applicable Federal and state securities laws.
2.5 SUBSIDIARIES. Except as set forth in the SEC Documents or
SCHEDULE 2.5 attached hereto, the Company has no subsidiaries nor any investment
or other interest in, or any outstanding loan or advance equal to or greater
than $100,000 to or from, any Person, including, without limitation, any
officer, director or shareholder. Except as set forth on SCHEDULE 2.5, the
Company owns of record and beneficially, free and clear of all Liens of any
nature, all of the issued and outstanding capital stock of each of its Material
Subsidiaries.
2.6 SECURITIES LAW COMPLIANCE. Assuming the representations and
warranties of the Purchasers set forth in Section 4.1 hereof are true and
correct, the offer and sale of the Purchased Shares and the Option Shares (the
"Issuable Securities") pursuant to this Agreement will be exempt from the
registration requirements of the Securities Act. Neither the Company nor any
person acting on its behalf has, in connection with the offering of the Issuable
Securities, engaged in (i) any form of general solicitation or general
advertising (as those terms are used within the meaning of Rule 502(c) under the
Securities Act), (ii) any action involving a public offering within the meaning
of Section 4(2) of the Securities Act, or (iii) any action that would require
the registration under the Securities Act of the offering and sale of the
Issuable Securities pursuant to this Agreement or that would violate applicable
state securities or "blue sky" laws. The Company has not made and will not prior
to the Closing make, directly or indirectly, any offer or sale of the Issuable
Securities or of securities of the same or similar class as the Issuable
Securities if, as a result, the offer and sale contemplated hereby could fail to
be entitled to exemption from the registration requirements of the Securities
Act. As used herein, the terms "offer" and "sale" have the meanings specified in
Section 2(3) of the Securities Act.
2.7 COMMISSION DOCUMENTS; FINANCIAL INFORMATION.
(a) The Company has made available to the Purchasers true
and complete copies of all SEC Documents filed with the Commission. As of their
respective filing dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder applicable to such SEC Documents, and
as of their respective dates none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company and its Material Subsidiaries included in the SEC
Documents (the "Financial Statements") comply as of their respective dates in
all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q promulgated by the Commission), and present fairly in all material
respects as of their respective dates the consolidated financial position of the
Company and its subsidiaries as at the dates thereof and the
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consolidated results of their operations and their consolidated cash flows for
each of the respective periods, in conformity with GAAP.
(b) Except as and to the extent expressly set forth in
the Balance Sheet, or the notes, schedules or exhibits thereto, or as disclosed
in the SEC Documents, (i) as of March 31, 2000, neither the Company nor the
Material Subsidiaries had any material liabilities or obligations (whether
absolute, contingent, accrued or otherwise) that would be required to be
included on a balance sheet or in the notes, schedules or exhibits thereto
prepared in accordance with GAAP and (ii) since March 31, 2000, the Company and
its Material Subsidiaries have not incurred any such material liabilities or
obligations other than in the ordinary course of business and which do not
exceed $50,000 in the aggregate.
2.8 ABSENCE OF CERTAIN EVENTS; NO MATERIAL ADVERSE CHANGE. Except
as disclosed in the SEC Documents filed with the Commission prior to the date
hereof, since March 31, 2000, the Company and its Material Subsidiaries each has
conducted its business operations in the ordinary course and there has not
occurred any event or condition having or, that is reasonably likely to have, a
Material Adverse Effect. Without limiting the generality of the foregoing, other
than as is disclosed in the SEC Documents filed with the Commission prior to the
date hereof or on SCHEDULE 2.8 hereto, since March 31, 2000 there has not
occurred:
(a) any change or agreement to change the general
character or nature of the business of the Company or any of its Material
Subsidiaries;
(b) any purchase, sale, transfer, assignment, conveyance
or pledge of the assets or properties of the Company or any of its Material
Subsidiaries, except in the ordinary course of business;
(c) any waiver or modification by the Company or any of
its Material Subsidiaries of any right or rights of substantial value, or any
payment, direct or indirect, in satisfaction of any liability, in each case,
having a Material Adverse Effect;
(d) any liability, contract, agreement, license, loan,
advance, capital expenditure or other commitment entered into or assumed by or
on behalf of the Company or any of its Material Subsidiaries relating to the
business, assets or properties of the Company or any of its Material
Subsidiaries, whether oral or written, except in the ordinary course of business
or which would individually or in the aggregate not have a Material Adverse
Effect;
(e) any change in the accounting principles, methods,
practices or procedures followed by the Company in connection with the business
of the Company or any change in the depreciation or amortization policies or
rates theretofore adopted by the Company in connection with the business of the
Company and its Material Subsidiaries;
(f) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of the
Company or any of its Material
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Subsidiaries (other than dividends declared or paid by wholly-owned Material
Subsidiaries) or any other change in authorized capitalization of the Company or
any of its Material Subsidiaries, except as contemplated by this Agreement;
(g) any grant or award of any options, warrants,
conversion rights or other rights to acquire any shares of capital stock of the
Company or any of its Material Subsidiaries, except as contemplated by this
Agreement or except pursuant to employee benefit plans, programs or arrangements
in existence on the date hereof, in the ordinary course of business consistent
with past practice; any adoption, or amendment in any material respect, by the
Company or any of its Material Subsidiaries of any collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, change of control, retention,
disability, death benefit, hospitalization, medical, or other plan, arrangement,
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer, or director of the Company or any of its
Material Subsidiaries (collectively, "Benefit Plans");
(h) any granting by the Company or any of its Material
Subsidiaries to any employee earning in excess of $100,000 per year of any
increase in compensation, severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the SEC
Documents or otherwise in the ordinary course of business; or
(i) entering into any commitment (contingent or
otherwise) to do any of the foregoing.
2.9 LITIGATION. Except as otherwise set forth on SCHEDULE 2.9,
there is no litigation or governmental proceeding or investigation pending or,
to the knowledge of the Company, threatened, against the Company or any Material
Subsidiary or affecting any of the Company's or such Material Subsidiary's
properties or assets, or to the knowledge of the Company against any officer or
key employee of the Company or any Material Subsidiary in his or her capacity as
such, nor has there occurred any event or, to the knowledge of the Company, does
there exist any condition on the basis of which any litigation, proceeding or
investigation might properly be instituted with any substantial chance of
recovery, including, without limitation, proceedings, investigations or
arbitrations by the Commission, the National Association of Securities Dealers,
Inc., any stock exchanges, other self-regulatory organizations or state
securities commissions. Since January 1, 2000, except as otherwise set forth on
SCHEDULE 2.9, the Company has not entered into any settlements of any litigation
or proceeding. Neither the Company, any Material Subsidiary, nor any officer,
material employee or shareholder of the Company or any Material Subsidiary in
his or her capacity as such is, to the knowledge of the Company, in default with
respect to any order, writ, injunction, decree, ruling or decision of any court,
commission, board or other government agency, which is expressly applicable to
the Company or any Material Subsidiary.
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2.10 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. The Company and
its Material Subsidiaries are in compliance with all of the provisions of this
Agreement and their respective charters and by-laws (or comparable
organizational instruments with different names), and, except as set forth on
SCHEDULE 2.10, in all material respects with the provisions of each mortgage,
indenture, lease, license, other agreement or instrument, and each judgment,
decree, judicial order, statute, and regulation (whether issued under domestic,
foreign or international law) by which any of them is bound or to which any of
them or any of their respective properties are subject. Assuming the
representations of the Purchasers set forth in Section 4.1 hereof are true and
correct, neither the execution, delivery or performance by the Company of this
Agreement and the Related Agreements, nor the offer, issuance, sale or delivery
of the Purchased Shares, or the Option Shares upon exercise of any Option, with
or without the giving of notice or passage of time, or both, will violate, or
result in any breach of, or constitute a default under, or result in the
imposition of any encumbrance upon any asset of the Company or any Material
Subsidiary pursuant to any provision of the Company's or such Material
Subsidiary's charter or by-laws (or comparable organizational instruments with
different names), or any statute, rule or regulation, contract, lease, judgment,
decree or other document or instrument by which the Company or any Material
Subsidiary is bound or to which the Company or any Material Subsidiary or any of
their respective properties are subject, or, to the knowledge of the Company,
will cause the Company or any Material Subsidiary to lose the benefit of any
right or privilege it presently enjoys or, to the knowledge of the Company,
cause any Person who is expected to normally do business with the Company or any
Material Subsidiary to discontinue to do so on the same basis.
2.11 TAXES. The Company and each Material Subsidiary has filed all
Tax returns (including statements of estimated Taxes owed) required to be filed
within the applicable periods for such filings (with due regard to any
extension) and has paid all Taxes required to be paid, and has established
adequate reserves (net of estimated Tax payments already made) for the payment
of all Taxes payable in respect to the period subsequent to the last periods
covered by such returns. Except as set forth on SCHEDULE 2.11, no deficiencies
for any Tax are currently assessed against the Company or any Material
Subsidiary, and no Tax returns of the Company or any Material Subsidiary have
been audited during the last three (3) years, and, there is no such audit
pending or, to the knowledge of the Company, contemplated. There is no Tax Lien,
whether imposed by any federal, state or local tax authority, outstanding
against the assets, properties or business of the Company or any Material
Subsidiary, except for any Lien for Taxes not yet due and payable. Neither the
Company nor any Material Subsidiary currently is the beneficiary of any
extension of time within which to file any tax return. There is no outstanding
claim by an authority in a jurisdiction where the Company does not file tax
returns that it is or may be subject to the imposition of any tax by that
jurisdiction. Neither the Company nor any Material Subsidiary has waived any
state of limitations in respect of taxes or agreed to any extension of time with
respect to any tax assessment of deficiency, or the collection of any tax, which
remains outstanding. Neither the Company nor any Material Subsidiary has made or
is obligated to make any payments or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code or that are
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subject to an excise tax under Section 4999 of the Code. Neither the Company nor
any Material Subsidiary is subject to any closing agreements with any tax
authority. No power of attorney has been granted by the Company, and is
currently in force, with respect to any matter relating to Taxes. For the
purposes of this Agreement, the terms "Tax" and "Taxes" shall include all
federal, state, local and foreign taxes, including income, franchise, property,
sales, withholding, payroll and employment taxes.
2.12 INTELLECTUAL PROPERTY; PROPRIETARY RIGHTS; EMPLOYEE
RESTRICTIONS. (a) For purposes of this Agreement, "Intellectual Property Rights"
shall mean all registered copyrights, copyright registrations and copyright
applications, trademark registrations and applications for registration, patents
and patent applications, trademarks, service marks, trade names and Internet
domain names that are used by the Company in the Company's business or by a
Material Subsidiary in its business as presently conducted, together with all
other intellectual property rights owned by the Company and/or any of its
Material Subsidiaries and used in connection with its business and (i) all
licenses, assignments and releases of intellectual property rights of others in
material works embodied in the Company's or any Material Subsidiary's products,
(ii) any and all intellectual property rights, licenses, databases, computer
programs and other computer software user interfaces, know-how, trade secrets,
customer lists, proprietary technology, processes and formulae, source code,
object code, algorithms, architecture, structure, display screens, layouts,
development tools, instructions, templates and marketing materials created by or
on behalf of the Company or any Material Subsidiary, and (iii) inventions, trade
dress, logos and designs created by or on behalf of the Company or any Material
Subsidiary. All Intellectual Property Rights purported to be owned by the
Company which were developed, worked on or otherwise held by any employee,
officer, consultant or otherwise are owned free and clear by the Company or a
Material Subsidiary (as the case may be) by operation of law or have been
validly assigned to the Company or a Material Subsidiary (as the case may be).
All licenses, assignments, and releases of Intellectual Property Rights are
valid and binding agreements of the Company and, to the Company's knowledge, of
the other parties thereto, enforceable in accordance with their terms. All
services provided to the Company and any Material Subsidiary by non-employees in
respect of the creation, modification or improvement of any Intellectual
Property Rights of the Company and any Material Subsidiary (including, without
limitation, software, hardware, copyrightable works and the like) have been
performed pursuant to agreements with the Company or any Material Subsidiary
that assign to the Company or any Material Subsidiary ownership or license to
use such Intellectual Property Rights, each of which is a valid and binding
agreement of the Company and, to the Company's knowledge, of the other parties
thereto, enforceable in accordance with its terms. The Intellectual Property
Rights are sufficient in all material respects to carry on the business of the
Company and each of its Material Subsidiaries as presently conducted. The
Company and each Material Subsidiary has ownership of or license to use all
Intellectual Property Rights as owned or licensed by the Company or a Material
Subsidiary (as the case may be) or has obtained any licenses, releases or
assignments reasonably necessary to use all third parties' Intellectual Property
Rights in works embodied in the Company's or any Material Subsidiary's products.
The present business activities or products of the Company and any of its
Material Subsidiaries do not infringe any Intellectual Property Rights of
others, except
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in those instances in which such infringement would not result in a Material
Adverse Effect. Except as set forth in SCHEDULE 2.12(A), neither the Company nor
any Material Subsidiary has received any written notice or other claim from any
person asserting that any of the Company's or such Material Subsidiary's present
activities infringe in any material respect any Intellectual Property Rights of
such person.
(b) The Company and each Material Subsidiary has all
franchises, permits, licenses and other rights and privileges required to permit
it to own its property and to conduct its business as it is presently conducted
other than franchises, permits, licenses and other rights and privileges which
if not held by the Company or such Material Subsidiary would not have a Material
Adverse Effect or result in a fine or penalty in excess of $5,000 individually
or in the aggregate.
2.13 AGREEMENTS OF DIRECTORS, OFFICERS AND EMPLOYEES. To the
knowledge of the Company, no director, officer or employee of or consultant to
the Company or any Material Subsidiary is in violation of any terms of any
employment contract, non-competition agreement, non-disclosure agreement, patent
disclosure or assignment agreement or other contract or agreement containing
restrictive covenants relating to the right of any such director, officer,
employee or consultant to be employed or engaged by the Company or such Material
Subsidiary because of the nature of the business conducted or proposed to be
conducted by the Company or such Material Subsidiary, or relating to the use of
trade secrets or proprietary information of others in each case, other than any
violation which would not have a Material Adverse Effect. Except as otherwise
set forth on SCHEDULE 2.13, all employees of the Company have executed an
employee confidentiality agreement, invention assignment agreement or
non-competitive or non-solicitation agreement with the Company.
2.14 GOVERNMENTAL AND INDUSTRIAL APPROVALS. The Company and each
of its Material Subsidiaries has all permits, licenses, orders, franchises and
other rights and privileges of all federal, state, local or foreign governmental
or regulatory bodies required for the Company and such Material Subsidiaries to
conduct their respective businesses as presently conducted other than permits,
licenses, orders, franchises and other rights and privileges which if not held
by the Company or such Material Subsidiary would not, individually or in the
aggregate, have a Material Adverse Effect. All such permits, licenses, orders,
franchises and other rights and privileges are in full force and effect and, to
the knowledge of the Company, no suspension or cancellation of any of them is
threatened, and none of such permits, licenses, orders, franchises or other
rights and privileges will be affected by the consummation of the transactions
contemplated in this Agreement and the Related Agreements.
2.15 CONTRACTS AND COMMITMENTS. All of the material contracts of
the Company or any of its Material Subsidiaries that are required to be
described in the SEC Documents, or to be filed as exhibits thereto, prior to the
date hereof are described in the SEC Documents, filed prior to the date hereof
or filed as exhibits thereto and are in full force and effect. True and complete
copies of all such material contracts have been made available to the Purchaser.
All material contracts
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to which the Company or its Material Subsidiaries are parties
on or prior to the date hereof which will be required to be described or filed
as an Exhibit in the SEC Documents required to be filed following the date
hereof have been provided to the Purchaser or are listed on SCHEDULE 2.15 and
are in full force and effect. Except as set forth on SCHEDULE 2.15, neither the
Company nor any of its Material Subsidiaries nor, to the knowledge of the
Company, any other party is in material breach of or in material default under
any such contract.
2.16 EMPLOYEE MATTERS. The Company has described in, or filed as
an exhibit to, the SEC Documents all of the following types of documents,
agreements, plans or arrangements that are required by federal securities laws
to be described in, or filed as an exhibit to, the SEC Documents: employment
agreements, consulting agreements, deferred compensation, pension or retirement
agreements or arrangements (including all "employee pension benefit plans" as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), bonus, incentive or profit-sharing plans or arrangements,
or labor or collective bargaining agreements, written or oral, in effect by the
Company and its Material Subsidiaries (the "ERISA Documents"). The Company has
no knowledge that any of the officers or other key employees of the Company or
any Material Subsidiary presently intends to terminate his or her employment.
The Company and its Material Subsidiaries are in compliance in all material
respects with all applicable laws and regulations relating to labor, employment,
fair employment practices, terms and conditions of employment, and wages and
hours. The Company and each Material Subsidiary is in compliance in all material
respects with the terms of all ERISA Documents; and each such ERISA Document, is
in compliance in all material respects with all of the requirements and
provisions of ERISA.
2.17 NO BROKERS OR FINDERS. Except as set forth on SCHEDULE 2.17,
no person has or will have, as a result of the transactions contemplated by this
Agreement, any right, interest or claim against or upon the Company, any of its
Material Subsidiaries or any Purchaser for any commission, fee or other
compensation as a finder or broker because of any act or omission by the Company
or any of its Material Subsidiaries.
2.18 TRANSACTIONS WITH AFFILIATES. Except disclosed in the SEC
Documents, there are no loans, leases or other agreements, understandings or
continuing transactions between the Company or any Material Subsidiary on the
one hand, and any officer or director of the Company or any Material Subsidiary
or any person owning five percent (5%) or more of the Common Stock of the
Company or any respective family member or Affiliate of such officer, director
or shareholder on the other hand that are required by federal securities laws to
be disclosed in the SEC Documents.
2.19 ASSUMPTIONS, GUARANTEES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS. Except as set forth on SCHEDULE 2.19, neither the Company nor any
Material Subsidiary has assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on or for any indebtedness of any other Person,
except guarantees by endorsement of negotiable instruments for deposit or
collection.
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2.20 FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any
Material Subsidiary has taken any action which would cause it to be in violation
of the Foreign Corrupt Practices Act of 1977, as amended, or any rules and
regulations thereunder. To the knowledge of the Company, there is not now, and
there has never been, any employment by the Company of, or beneficial ownership
in the Company or any Material Subsidiary by, any governmental or political
official in any country in the world.
2.21 INVESTMENT COMPANY ACT. The Company is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
2.22 DISCLOSURES. Neither this Agreement, any Schedule or Exhibit
to this Agreement or the Related Agreements contains any untrue statement of a
material fact by the Company or omits a material fact required to be provided by
the Company in response to the requirements of this Agreement or any such
Schedule or Exhibit to make the statements made herein or therein, in light of
the circumstances in which made, not misleading.
ARTICLE III
COVENANTS OF THE COMPANY
Without limiting any other covenants and provisions hereof or as may be
otherwise set forth below, the Company covenants and agrees that it will observe
the following covenants on and after the date hereof and for so long as either
Purchaser hold any shares of Common Stock:
3.1 INSPECTION. Upon prior notice, at any reasonable time during
normal business hours and from time to time, the Company (and each of its
Material Subsidiaries) will permit each Purchaser who at such time owns 2% or
more of the then outstanding capital stock of the Company, or any of its
authorized agents or representatives, to examine and make copies of and extracts
from the records and books of account of and visit the properties of the Company
(and any of its Material Subsidiaries) and to discuss the Company's affairs,
finances and accounts with any of its officers or directors; provided that any
Person or Persons exercising rights under this Section 3.1 shall (i) use all
reasonable efforts to ensure that any such examination or visit results in a
minimum of disruption to the operations of the Company and its Subsidiaries and
(ii) prior to the Company disclosing or providing access to information with
respect to the Company or any Subsidiary, shall agree in writing to keep all
proprietary information of the Company or any Subsidiary disclosed to him in the
course of such inspection confidential in a manner consistent with prudent
business practices and treatment of such Person's or Persons' own confidential
information. The rights granted under this Section 3.1 shall be in addition to
any rights which a Purchaser may have under applicable law in its capacity as a
shareholder of the Company.
3.2 BOARD OF DIRECTORS. In the event that the Purchasers jointly
own at least 10% of the issued and outstanding Common Stock, the Company shall
use its reasonable best efforts to
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cause the election of, and to thereafter continue in office until such time as
the Purchasers jointly own less than 6% of the then issued and outstanding
Common Stock a representative mutually agreed upon by each of the Purchasers and
the Company (a "Purchaser Representative") as a member of its Board of
Directors, including, without limitation, recommending for election of such
Purchaser Representative at a meeting of the Company's stockholders. In the
event that the Purchasers jointly own 15% or more of the issued and outstanding
Common Stock upon the exercise of the Options, the Company shall use its
reasonable best efforts to cause the election of, and to thereafter continue in
office until such time as the Purchasers jointly own less than 15% of the then
issued and outstanding Common Stock, an additional Purchaser Representative,
mutually agreed upon by each of the Purchasers and the Company, as a member of
its Board of Directors, including, without limitation, recommending for election
of such Purchaser Representative at a meeting of the Company's stockholders. If
at any time (i) two (2) Purchaser Representatives are serving as directors of
the Company and (ii) the Purchasers jointly own less than 15% of the then issued
and outstanding Common Stock, then, upon the vote of a majority of the Board of
Directors (excluding all of the Purchaser Representatives) requesting one of the
Purchaser Representatives to resign, the Purchasers shall cause such Purchaser
Representative to resign from the Company's Board of Directors. If at any time
(i) a Purchaser Representative is serving as a director of the Company and (ii)
the Purchasers jointly own less than 6% of the then issued and outstanding
Common Stock, then, upon the vote of a majority of the Board of Directors
(excluding all of the Purchaser Representatives) requesting the Purchaser
Representatives to resign, the Purchasers shall cause such Purchaser
Representative to resign from the Company's Board of Directors.
The Certificate of Incorporation, as amended (and all subsequent
amendments and restatements thereof), and/or By-laws of the Company shall, at
all times that a Purchaser Representative is a member of the Board of Directors
of the Company, provide for indemnification of the directors and limitations on
the liability of the directors as currently provided or enhanced. The Company
will enter into a mutually acceptable indemnity agreement with any Purchaser
Representative similar in all material respects to the agreement that the
Company has with its other directors as of the date hereof and will be amended
in a manner similar to any favorable amendment of any such other agreement. The
Company shall reimburse any Purchaser Representative for his or her reasonable
travel expenses, including the cost of airfare and any necessary meals and
lodging, incurred in connection with attending meetings of the Board of
Directors, in each case to the same extent as the Company reimburses such costs
to the other members of the Board of Directors. In addition, the Company shall
maintain at all times a Compensation Committee and an Audit Committee of the
Board of Directors. A vacancy in the directorship to be occupied by any
Purchaser Representative shall be filled only by a nominee of the Purchasers who
must be appointed by the Board of Directors in accordance with the By-laws of
the Company. Any Purchaser Representative shall be entitled to attend in person
or by telephone conference call any and all meetings of the Board of Directors
and all committees thereof to the extent he is a member of such committee.
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3.3 THE COMPANY SEC DOCUMENTS. Commencing on the Closing Date and
continuing until the later of (i) two (2) years from the Closing Date or (ii)
two years from the date of the issuance of the Option Shares, the Company shall
continue to file all reports in accordance with Section 13 and 15(d) of the
Securities Exchange Act with the Commission in order to maintain its eligibility
to register Purchased Shares on Form S-3 (or any successor form thereto) and to
permit the Purchaser to sell the Purchased Shares pursuant to Rules 144 and 144A
under the Act. After the Closing Date and continuing until the later of (i) two
(2) years from the Closing Date or (ii) two years from the date of the issuance
of the Option Shares, the Company will file with the Commission SEC Documents
and any other such reports and other materials required to be filed by the
Company under the federal securities laws on a timely basis.
ARTICLE IV
INVESTMENT REPRESENTATIONS
4.1 REPRESENTATIONS AND WARRANTIES. Each Purchaser, severally and
not jointly, hereby represents and warrants to the Company, understanding and
agreeing that the Company is entering into this Agreement in part in reliance on
such representations and warranties, as follows:
(a) Such Purchaser is an "Accredited Investor" as that
term is defined in Rule 501(a) of Regulation D promulgated under the Act;
(b) Such Purchaser is duly authorized to execute this
Agreement and the Related Agreements, and assuming due execution and delivery by
the Company of the Agreement and the Related Agreements, this Agreement and the
Related Agreements to which such Purchaser is a party constitute legal, valid
and binding obligations of such Purchaser, enforceable against such Purchaser in
accordance with their respective terms;
(c) Such Purchaser has been advised by the Company that
the Purchased Shares, the Option and the Option Shares have not been registered
under the Act, that the Purchased Shares, the Option and the Option Shares will
be issued on the basis of the statutory exemption provided by Section 4(2) of
the Act or Regulation D promulgated thereunder, or both, relating to
transactions by an issuer not involving any public offering and under similar
exemptions under certain state securities laws, that this transaction has not
been reviewed by, passed on or submitted to any federal or state agency or
self-regulatory organization where an exemption is being relied upon, and that
the Company's reliance thereon is based in part upon the representations made by
such Purchaser in this Agreement and the Related Agreements. Such Purchaser
acknowledges that it has been informed by the Company of, or is otherwise
familiar with, the nature of the limitations imposed by the Act and the rules
and regulations thereunder on the transfer of securities;
(d) Such Purchaser is purchasing the Purchased Shares
and, if applicable, the Option Shares, and being granted the Option for
investment purposes, for its own account and
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not with a view to, or for sale in connection with, any distribution thereof in
violation of federal or state securities laws;
(e) By reason of its business or financial experience,
such Purchaser has the capacity to protect its own interest in connection with
the transactions contemplated hereunder; and
(f) No person has or will have, as a result of the
transaction contemplated by this Agreement, any right, interest or claim against
or upon such Purchaser, the Company, or any of its Subsidiaries for any
commission, fee or other compensation as a finder or broker because of any act
or omission by the Purchaser.
4.2 PERMITTED SALES; LEGENDS. Notwithstanding the foregoing
representations, the Company agrees that it will permit (i) a distribution of
Purchased Shares and the Option Shares by a Purchaser to one or more Permitted
Transferees, if the Permitted Transferee agrees in writing to be subject to the
terms hereof to the same extent as if it were an original purchaser hereunder
and (ii) subject to the provisions of Section 9.16 hereof, a sale or other
transfer of any of the Purchased Shares and the Option Shares if such
transaction is exempt from the registration requirements of, or is covered by an
effective registration statement under, the Act and applicable state securities
or "blue-sky" laws. The certificates representing the Purchased Shares and the
Option Shares shall bear a legend evidencing such restriction on transfer
substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF
COUNSEL FOR THE HOLDER, REASONABLE SATISFACTORY TO
THESTREET.COM, INC. (THE "COMPANY"), THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT. IN
ADDITION, THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A
SECURITIES PURCHASE AGREEMENT (THE "AGREEMENT"),
DATED AS OF AUGUST 7, 2000, BY AND AMONG THE
COMPANY, GO2NET, INC. AND VULCAN VENTURES INC.,
WHICH, INTER ALIA, RESTRICT THE TRANSFERABILITY OF
SUCH SHARES IN CERTAIN CASES. A COPY OF THE
AGREEMENT IS ON FILE AT THE OFFICES OF THE COMPANY.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE
HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE
RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE RIGHTS
AGENT THEREUNDER (THE "RIGHTS AGREEMENT"), THE
TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS
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ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY
SEPARATE CERTIFICATES AND WILL NO LONGER BE
EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL
MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF
MAILING, WITHOUT CHARGE, PROMPTLY AFTER RECEIPT OF
A WRITTEN REQUEST THEREFOR. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS,
WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR
ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
HOLDER, MAY BECOME NULL AND VOID."
ARTICLE V
CONDITIONS OF PURCHASERS' OBLIGATION
5.1 EFFECT OF CONDITIONS. The obligation of the Purchasers to
purchase and pay for the Purchased Shares at the Closing shall be subject at
their election to the satisfaction of each of the conditions stated in the
following Sections of this Article V.
5.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall be true and correct
on the date of the Closing.
5.3 PERFORMANCE. The Company shall have performed and complied
with all of the agreements, covenants and conditions contained in this Agreement
required to be performed or complied with by it at or prior to the Closing.
5.4 INTENTIONALLY OMITTED.
5.5 OPINION OF COUNSEL. The Purchasers shall have received an
opinion, dated the date of the Closing, from (i) Hughes Hubbard & Reed LLP, in
the form attached hereto as EXHIBIT B attached hereto, and (ii) Jordan
Goldstein, Vice President and General Counsel to the Company, in the form of
EXHIBIT C attached hereto.
5.6 CERTIFIED DOCUMENTS, ETC. Counsel for the Purchasers shall
have received a copy of the Company's Certificate of Incorporation, as amended,
certified by the Secretary of State of the State of Delaware and copies of the
Company's By-Laws certified by its Secretary, as well as any and all other
documents, including certificates of incumbency of officers and certificates
from appropriate authorities as to the legal existence and good standing of the
Company and its Material Subsidiaries, which the Purchasers or their counsel may
reasonably request.
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5.7 NO MATERIAL ADVERSE CHANGE. The business, properties, assets
or financial condition of the Company and its Material Subsidiaries, taken as a
whole, shall not have been materially adversely affected since the date of this
Agreement, whether by fire, casualty, act of God or otherwise, and there shall
have been no other changes in the business, properties, assets, financial
condition or management of the Company or any of its Material Subsidiaries,
taken as a whole, that would have a material adverse effect on their combined
businesses or assets.
5.8 CO-BRANDING AND MARKETING AGREEMENT. The Company and Go2Net
shall have executed the Co-Branding and Marketing Agreement in the form of
EXHIBIT D attached hereto (the "Co-Branding and Marketing Agreement").
5.9 CONSENTS AND WAIVERS. The Company shall have obtained all
consents or waivers necessary to execute this Agreement and the other agreements
and documents contemplated herein, to issue the Purchased Shares and the Option
Shares, and to carry out the transactions contemplated hereby and thereby. All
corporate and other action and governmental filings necessary to effectuate the
terms of this Agreement, the Related Agreements, the Purchased Shares, the
Option and other agreements and instruments executed and delivered by the
Company in connection herewith shall have been made or taken.
5.11 COMMON STOCK CERTIFICATES. The Company shall have delivered a
stock certificate to each Purchaser representing the portion of the Purchased
Shares to be purchased by such Purchaser.
5.12 HSR ACT. The acquisition of the Purchased Shares by the
Purchasers shall either be exempt from the filing and notification requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), or the parties shall have duly filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice the reports
required under the HSR Act with respect to the sale and purchase of the
Purchased Shares and the waiting period required by the HSR Act shall have
expired or been earlier terminated by such governmental authorities.
5.13 DUE DILIGENCE. The Purchasers shall have satisfactorily
completed their business, financial, accounting and legal due diligence
investigation of the Company.
5.14 Amendment No. 1 to Rights Agreement. The Company and American
Stock Transfer & Trust Company shall have executed Amendment No. 1 to Rights
Agreement in the form of EXHIBIT E attached hereto.
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ARTICLE VI
CONDITIONS OF THE COMPANY'S OBLIGATION
6.1 EFFECT OF CONDITIONS. The Company's obligation to sell the
Purchased Shares shall be subject at its election to the satisfaction of each of
the conditions stated in the following Sections of this Article VI.
6.2 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The
representations and warranties of each Purchaser contained in this Agreement
shall be true and correct on the date of the Closing with the same effect as
though made on and as of that date and, with respect to the Company's obligation
to issue and deliver Purchased Shares and an Option to each Purchaser, each
Purchaser shall have tendered payment for the Purchased Shares and the Options
at the Closing in accordance with Section 1.3 hereof.
6.3 CO-BRANDING AND MARKETING AGREEMENT. The Company and the
Purchaser shall have executed the Co-Branding and Marketing Agreement in the
form of EXHIBIT D attached hereto.
6.4 CONSIDERATION FOR THE SHARES. Each of the Purchasers shall
have paid the purchase price of the Purchased Shares to be purchased by such
Purchaser in full at the Closing either by certified check or by wire transfer
of immediately available funds to an account designated in writing by the
Company.
6.5 PERFORMANCE. The Purchasers shall have performed and complied
with all of the agreements, covenants and conditions contained in this Agreement
required to be performed or complied with by them at or prior to the Closing.
6.6 HSR ACT. The acquisition of the Purchased Shares by the
Purchasers shall either be exempt from the filing and notification requirements
of the HSR Act, or the parties shall have duly filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice the reports
required under the HSR Act with respect to the sale and purchase of the
Purchased Shares and the waiting period required by the HSR Act shall have
expired or been earlier terminated by such governmental authorities.
ARTICLE VII
REGISTRATION RIGHTS AGREEMENT
7.1 CERTAIN DEFINITIONS. As used in this Article VII, the
following terms shall have the following meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
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"Registrable Securities" means any of (i) Purchased Shares, (ii) the
Option Shares and (iii) any other securities issued or issuable with respect to
the Purchased Shares or the Option Shares by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Any Registrable Security
will cease to be a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared effective under the
Securities Act by the Commission and such Registrable Security has been disposed
of pursuant to such effective registration statement, (ii) such Registrable
Security may be resold, without any limitation as to volume, pursuant to Rule
144 under the Securities Act (or a comparable successor rule or regulation), or
otherwise may be publicly resold without registration under the Securities Act
and without any limitation as to volume or other material restriction, or (iii)
such Registrable Security is no longer held by the Purchaser to which it was
issued pursuant to this Agreement; PROVIDED; HOWEVER, that the foregoing shall
not apply to a transfer to any Permitted Transferee or any other transferee with
the prior written consent which shall not be unreasonably withheld.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, incurred by the
Company or the Purchasers in complying with Section 7.2.1 or 7.2.2 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, stock transfer taxes applicable to the
securities registered by each Purchaser, all fees and disbursements of one (1)
counsel for the Purchasers, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company
provided, however, that the Registration Expenses shall not include any and all
Selling Expenses).
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions.
7.2. REGISTRATION
7.2.1 REGISTRATION OF REGISTRABLE SECURITIES.
(a) Subject to the terms and conditions of this Agreement, on or
after November 7, 2000, the Purchasers, acting jointly, may make one (1) written
request to the Company for registration under the Securities Act of the sale of
Registrable Securities held by the Purchasers (the "Demand Registration");
provided that the Company shall not be obligated to
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effect more than one (1) Demand Registration pursuant to this Agreement, and
provided further that the Company shall only be obligated to effect a Demand
Registration if the net proceeds to be realized in connection with such Demand
Registration shall be reasonably expected to be more than $1,000,000. The
Company shall use its reasonable best efforts to cause such registration
statement to become effective as soon as possible and remain effective for the
period ending on the earlier of (i) 180 days from the date of effectiveness of
said registration statement and (ii) the sale of all of Registrable Securities.
(b) The Company shall have the right to include its securities in
any registration initiated as a Demand Registration; provided that: (i) such
securities are of the same class as the Registrable Securities included in such
registration; (ii) if any of the Registrable Securities covered by such
registration are sold in an underwritten offering, the Company agrees in writing
to sell its securities on the same terms and conditions as apply to the
Registrable Securities being sold; and (iii) if any of the Registrable
Securities covered by such registration are to be sold in an underwritten
offering, the managing underwriters shall not have advised the Company or the
Purchasers that, in their opinion, the inclusion of the Company's securities
would reduce in any material respect the amount or sale price of the securities
to be included in such registration by the Purchasers for their account.
(c) The Purchasers shall have the right to select the managing
underwriter to administer the Demand Registration; provided, that such managing
underwriter shall be approved by the Company, such approval not to be
unreasonably withheld or delayed. The Purchasers and the Company shall enter
into an underwriting agreement in such customary form as shall have been
negotiated and agreed to by the Company with the underwriter or underwriters
selected for such underwriting, provided that (x) the Purchasers shall have the
right to negotiate the economic terms of the offering and (y) such underwriting
agreement shall be approved by the Purchasers, such approval not to be
unreasonably withheld or delayed.
(d) Notwithstanding anything to the contrary in this Agreement,
the Company will be entitled to postpone the filing of a registration statement
required to be filed by it pursuant to this Agreement for ninety (90) days, if
(i) at any time prior to the filing of such registration statement a majority of
the Board of Directors of the Company determines, in its good faith business
judgment, that such registration and offering would have a Material Adverse
Effect on any financing, acquisition, corporate reorganization or other material
transaction or development involving the Company or any of its Affiliates and
(ii) the Company gives the Purchasers written notice of such postponement,
provided that such postponements may not in any 365-day period occur more than
once, and, provided further, that in the event of any such withdrawal or
termination of effectiveness, such registration shall not act as a registration
effected for purposes of Section 7.2.1(a). In the event of such postponement,
the Company will file such registration statement as soon as practicable after
it determines, in its good faith business judgment, that such registration and
offering will not interfere with the matters described in the first sentence of
this Section 7.2.1(d), but in no event more than ninety (90) days after that
date that such registration statement would otherwise have been filed, provided
that the
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Purchasers shall have the right to withdraw their request for Demand
Registration by giving written notice to the Company within ninety (90) days of
receipt of the notice of postponement, and in the event of such withdrawal, the
request so withdrawn shall be deemed to have not been made.
(e) Each Registration Statement in respect of a Demand
Registration will be for the offering and sale of such Registrable Securities on
such basis as the Purchasers reasonably request, which may be a continuous
offering (including a shelf) if so requested by the Purchasers.
(f) The Company shall promptly prepare and file with the
Commission such amendments to the registration statements as may be necessary to
keep such registration statements effective in accordance with this Section
7.2.1.
(g) Notwithstanding anything in the contrary in this Agreement, if
at any time after the filing of a registration statement (i) in the case of any
registration statement for a firm commitment underwritten offering of
Registrable Securities, before it is declared effective by the Commission, or
(ii) in the case of any other registration statement, before or after it is
declared effective by the Commission, a majority of the Board of Directors of
the Company determines, in its good faith business judgment, that such
registration and the offering of Registrable Securities covered by such
registration statement would materially interfere with or otherwise materially
adversely affect any financing, acquisition, corporate reorganization or other
material transaction or development involving the Company or any of its
affiliates or require the Company to disclose matters that otherwise would not
be required to be disclosed at such time, then the Company may require the
suspension of the distribution of any Registrable Securities (a "Blackout
Period") by giving written notice to the Purchasers. Any such notice need not
specify the reasons for such suspension if a majority of the Board of Directors
of the Company determines, in its good faith business judgment, that doing so
would interfere with or adversely affect such transaction or development or
would result in the disclosure of material non-public information. In the event
that such notice is given, then until a majority of the Board of Directors of
the Company has determined, in its good faith business judgment, that such
registration and distribution would no longer materially interfere with the
matters described in the preceding sentence and has given written notice thereof
to the Purchasers, the Company's obligations under this Article 7 will be
suspended, provided, that such suspension shall not exceed the first to occur of
(x) the filing of the Company's next filing with the Commission and (y) ninety
(90) days. The Company shall extend the period of time the Company is required
to maintain effective any registration statement required pursuant to Section
7.2.1(f) by a length of time equal to the aggregate length of the Blackout
Periods. In the event of any suspension of a registration pursuant to this
Section 7.2.1(g), the Purchasers shall be entitled to withdraw from such
registration upon written notice to the Company, and in the event of such
withdrawal, the request so withdrawn shall be deemed to have not been made.
7.2.2 PIGGYBACK REGISTRATION.
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(a) If at any time on or before August 7, 2001, during which the
registration statement filed pursuant to Section 7.2.1 above is not effective
the Company proposes to register any shares of Common Stock under the Securities
Act in connection with an underwritten offering, either for its own account or
the account of a security holder or holders exercising their registration rights
(except pursuant to a registration statement filed on Form S-4 or Form S-8 or
such other form as shall be prescribed under the Securities Act for the same
purposes), the Company will promptly at each such time give written notice to
each Purchaser of its intention to do so. Within twenty (20) days after receipt
of such notice, each Purchaser may request that the Company register all or part
of the Registrable Securities (the "Designated Shares"). Upon receipt of such
request, the Company shall use its reasonable best efforts to effect the
registration of the Designated Shares identified by including such Designated
Shares in such registration statement.
(b) In the event that securities of the same class as the
Designated Shares are being registered by the Company in such registration
statement and such securities as well as any of the Designated Shares are to be
distributed in an underwritten offering, such Designated Shares shall be
included in such underwritten offering on the same terms and conditions as the
securities being issued by the Company for distribution pursuant to such
underwritten offering; PROVIDED, HOWEVER, that if the managing underwriter of
such underwritten offering reasonably determines in good faith and advises the
parties that the inclusion in such underwritten offering of all the Designated
Shares would materially and adversely affect the success of the underwritten
offering, then the Company may offer all of the securities it proposes to
register for its own account for the maximum amounts that the underwriter
considers saleable, and thereafter the number of Designated Shares to be
included in the registration statement shall be reduced to the amount
recommended in good faith by and set forth in the opinion of such managing
underwriter; PROVIDED, FURTHER, that as to the Purchasers, such reduction shall
be pro rata (based on the number of shares held by each) with respect to the
Designated Shares with other persons holding contractual, incidental or
"piggy-back" registration rights as of the Closing Date hereof in such
underwritten offering, provided, further, that as to the Purchasers, all of the
Designated Shares shall be included in the registration statement prior to the
inclusion of any shares held by persons who receive contractual, incidental or
"piggy-back" registration rights subsequent to the Closing Date.
7.2.3 EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with registrations pursuant to Sections 7.2.1 and 7.2.2 shall be
borne by the Company. Subject to Section 9.16, Selling Expenses shall be borne
by each Purchaser based upon the number of Registrable Securities registered by
each Purchaser on such registration statement.
7.2.4 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep the Purchasers advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. The Company will:
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(a) Prepare and furnish to each Purchaser and to the
underwriters (if any) of the securities being registered such reasonable number
of copies of the registration statement, preliminary prospectus, final
prospectus (any supplements or revisions thereto required under the Securities
Act) and such other documents as each Purchaser and underwriters may reasonably
request in order to facilitate the public offering of such securities and make
the Company's representatives and the Company's counsel available for discussion
of such document and make such changes in such document relating to the
Purchaser prior to the filing thereof as each Purchaser, counsel for each
Purchaser, or underwriters may reasonably request.
(b) Use its reasonable best efforts to register and
qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by each Purchaser, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(c) Notify each Purchaser at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and to promptly prepare and file all amendments or
supplements and related revised prospectuses as shall be required under the
Securities Act as a result of such untrue statements or omissions.
(d) Use its reasonable best efforts to comply with all
applicable federal and state securities laws (including without limitation the
rules and regulations of the Commission), and make generally available to its
security holders earning statements satisfying the provisions of Section 11(a)
of the Securities Act no later than forty-five (45) days after the end of a
twelve (12) month period after the Closing Date (or within ninety (90) days
after the end of a fiscal year).
(e) At the request of each Purchaser, use its reasonable
best efforts to furnish on the date that the Registrable Securities are
delivered to any underwriter for sale in connection with a registration pursuant
to this Agreement (i) an opinion of the counsel representing the Company for the
purposes of such registration, and (ii) a letter from the independent certified
public accountants of the Company, each dated such date and in form and
substance as is customarily given by counsel and independent certified public
accountants to underwriters in an underwritten public offering, addressed to
each Purchaser's underwriter and to each Purchaser.
The Purchasers, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (c) above, will
forthwith discontinue, and cause their respective Affiliates to discontinue,
disposition of the Registrable Securities until the Purchasers'
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receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph (c) above or until they are advised in writing by the Company that the
use of the prospectus may be resumed and have received copies of any additional
or supplemental filings which are incorporated by reference in the prospectus.
If so directed by the Company, the Purchasers will deliver to the Company or
destroy all copies, other than permanent file copies then in the possession of
the Purchasers or their respective Affiliates, of the prospectus required to be
supplemented or amended.
7.3 INDEMNIFICATION.
(a) With respect to any registration of Registrable
Securities, the Company will indemnify each Purchaser, its officers and
directors and each person controlling the Purchaser within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act, the
Securities Exchange Act, state securities law or any rule or regulation
promulgated under such laws applicable to the Company in connection with any
such registration, qualification or compliance, and the Company will reimburse
each Purchaser, each of their officers, directors and partners, and each person
controlling such Purchaser, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred,
as such expenses are incurred, in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, whether or not
resulting in any liability, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Purchaser, controlling person or underwriter and stated to be specifically for
use therein; provided, however, that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any such untrue
statement, alleged untrue statement, omission or alleged omission made in a
preliminary prospectus, such indemnity agreement shall not inure to the benefit
of any underwriter, or each Purchaser, if there is no underwriter, if a copy of
the final prospectus filed with the Commission pursuant to its Rule 424(b) was
not furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act, and if such
final prospectus cured the untrue statement, alleged untrue statement, omission
or alleged omission giving rise to the loss, liability, claim or damage.
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(b) With respect to any registration of Registrable
Securities, each Purchaser will indemnify, severally and not jointly, the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such registration statement, and each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act against all expenses, claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such directors, officers, partners, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by the Purchaser and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Purchaser under this
Section 7.3(b) shall be limited to and in proportion to an amount equal to the
net proceeds received by such Purchaser from the sale of the Registrable
Securities sold by the Purchaser pursuant to such registration statement. In no
event will a Purchaser be required to enter into any agreement or undertaking
for the benefit of the Company in connection with any registration under this
Agreement providing for any indemnification or contribution obligations on the
part of the Purchaser greater than the Purchaser's obligations under this
Section 7.3(b).
(c) Each party entitled to indemnification under this
Section 7.3 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action, and provided further that the Indemnifying Party shall not
assume the defense for matters as to which representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to actual or potential differing interests between them, but
shall instead in such event pay the fees and costs of separate counsel for the
Indemnified Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No
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Indemnified Party shall be entitled to indemnification from any Indemnifying
Party for any amounts paid in any settlement effected without the consent of the
Indemnifying Party.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Party or any officer, director or controlling person
of such Indemnified Party.
7.4 PURCHASER CONDITIONS. The Company's obligations to
the Purchasers under this Article 7 will be conditioned on compliance with the
following:
(a) The Purchasers and their respective Affiliates will
cooperate with the Company in connection with the preparation of the applicable
registration statement, and for so long as the Company is obligated to keep such
registration statement effective, the Purchasers and their respective Affiliates
will provide to the Company, in writing and in a timely manner, for use in such
registration statement (and expressly identified in writing as such), all
information regarding themselves and their respective Affiliates and such other
information as may be required by applicable law to enable the Company to
prepare such registration statement and the related prospectus covering the
applicable Registrable Securities owned by the Purchasers and to maintain the
currency and effectiveness thereof, so long as the Company executes a
confidentiality agreement in form and substance reasonably satisfactory to the
Purchasers in the event any confidential information is requested by the
Company;
(b) During such time as the Purchasers and their
respective Affiliates may be engaged in a distribution of the Registrable
Securities, the Purchasers and their respective Affiliates will comply with all
applicable laws, including Regulation M promulgated under the Exchange Act, and,
to the extent required by such laws, will, among other things: (A) not engage in
any stabilization activity in connection with the securities of the Company in
contravention of such rules; (B) distribute the Registrable Securities acquired
by it solely in the manner described in the applicable registration statement;
and (C) if required by applicable law, rules or regulations, cause to be
furnished to each agent or broker-dealer to or through whom such Registrable
Securities may be offered, or to the offeree if an offer is made directly by the
Purchasers and their respective Affiliates, such copies of the applicable
prospectus (as amended and supplemented to such date) and documents incorporated
by reference therein as may be required by such agent, broker-dealer or offeree,
provided that the Company shall provide the Purchasers with an adequate number
of copies thereof; and
(c) The Purchasers and their respective Affiliates will
permit the Company and its representatives and agents to examine such documents
and records and will supply in a timely manner any information as they may be
reasonably request to provide in connection with the offering or other
distribution of Registrable Securities by the Purchasers;
(d) On notice from the Company of the happening of any of
the events specified in Section 7.4(c), or that requires the suspension by the
Purchasers and their respective
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Affiliates of the distribution of any of the Registrable Securities owned by the
Purchasers, then the Purchasers and their respective Affiliates will cease
offering or distributing the Registrable Securities owned by the Purchasers
until the offering and distribution of the Registrable Securities owned by the
Purchasers may recommence in accordance with the terms hereof and applicable
law.
(e) The Purchasers and their respective Affiliates will
enter into such agreements with the Company and any broker-dealer or similar
securities industry professional containing representations, warranties,
indemnities and agreements as are customarily entered into and made by a seller
of securities and such seller's controlling shareholders with respect to
secondary distributions under similar circumstances.
7.5 Intentionally Omitted
7.6 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted each Purchaser under
this Article VII may be assigned or transferred to any
Permitted Transferee of any of the Registrable Securities or
any other transferee of any of the Registrable Securities with
the prior written consent of the Company which shall not be
unreasonably withheld.
ARTICLE VIII
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Affiliate" of any Person shall mean any Person, directly or
indirectly, controlling, controlled by or under common control with such Person.
"Agreement" means this Securities Purchase Agreement as from time to
time amended and in effect between the parties.
"Benefit Plans" shall have the meaning set forth in Section 2.8(e).
"Call Notice" shall have the meaning set forth in Section 1.2(b).
"Closing" and "Closing Date" shall the meanings set forth in Section
1.3.
"Co-Branding and Marketing Agreement" shall have the meaning set forth
in Section 5.8.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Commission" shall have the meaning set forth in Section 2.3.
"Common Stock" shall have the meaning set forth in the preamble.
"Company" means and shall include TheStreet.com, Inc., a Delaware
corporation, its predecessors, successors and assigns.
"Demand Registration" shall have the meaning set forth in Section
7.2.1.
"ERISA" shall have the meaning set forth in Section 2.16.
"ERISA Documents" shall have the meaning set forth in Section 2.16
"Financial Statements" shall have the meaning set forth in Section 2.7.
"Founders" shall mean James J. Cramer and Martin Peretz.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board.
"Go2Net" shall mean Go2Net, Inc., a Delaware corporation, its
predecessors, successors and assigns.
"Go2Net Option" shall have the meaning set forth in Section 1.2(a).
"Go2Net Option Shares" shall have the meaning set forth in Section
1.2(a).
"HSR Act" shall have the meaning set forth in Section 5.10.
"Indemnified Party" and "Indemnifying Party" shall have the meanings
set forth in Section 7.5(c).
"Intellectual Property Rights" shall have the meaning set forth in
Section 2.12.
"Issuable Securities" shall have the meaning set forth in Section 2.6.
"Legal Expenses" shall have the meaning set forth in Section 9.12.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
restriction transferability,
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adverse claim by a third party, title defect or encumbrance of any nature
whatsoever on any property or property interest (including any conditional sale
or other title retention agreement, any lease in the nature thereof, any
assignment or other conveyance of any right to receive income and any assignment
of receivables with recourse against assignor), any filing of any financing
statement as debtor under the Uniform Commercial Code or comparable law of any
jurisdiction and any agreement to give or make any of the foregoing.
"Material Adverse Effect" shall mean a material adverse effect upon the
business, financial condition, assets, or results of operations of the Company
and any of its Material Subsidiaries, taken as a whole.
"Material Subsidiary" or "Material Subsidiaries" shall mean any
"significant subsidiary" as defined under Regulation S-X of the Securities
Exchange Act of 1934, as amended.
"Option" shall have the meaning set forth in Section 1.2(a).
"Option Closing" shall have the meaning set forth in Section 1.2(b).
"Option Shares" shall have the meaning set forth in Section 1.2(a).
"Permitted Transferee" shall mean with respect to each Purchaser (i) an
Affiliate of such Purchaser, (ii) a successor of such Purchaser, (iii) the other
Purchaser, (iv) an Affiliate of the other Purchaser or (v) a successor of the
other Purchaser, provided that with respect to Go2Net, a Permitted Transferee
shall not include any officer or director of Go2Net.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization or a
government or agency or political subdivision thereof.
"Preferred Stock" shall have the meaning set forth in Section 2.4(a).
"Purchased Shares" shall have the meaning set forth in Section 1.1.
"Purchaser" shall mean either Go2Net or Vulcan.
"Purchaser Representative" shall have the meaning set forth in Section
3.2.
"Purchasers" shall mean Go2Net and Vulcan.
"Related Agreements" shall have the meaning set forth in Section 2.2.
"SEC Documents" means all reports, schedules, registration statements
and other documents (including all exhibits and schedules thereto) filed by the
Company with the Commission on or after December 31, 1999.
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"Securities Act" shall have the meaning set forth in Section 2.4(c).
"Tax" and "Taxes" shall have the meaning set forth in Section 2.11.
"Vulcan" shall mean Vulcan Ventures Inc., a Washington corporation, its
predecessors, successors and assigns.
ARTICLE IX
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS. The representations, warranties,
covenants and agreements made herein or in any certificates or documents
executed in connection herewith shall survive the execution and delivery hereof
and the Closing of the transactions contemplated hereby. Notwithstanding the
foregoing, the representations and warranties contained in or made pursuant to
this Agreement shall terminate on, and no claim or action with respect thereto
may be brought after, the second anniversary of the Closing Date, except that
the representations and warranties contained in Sections 2.4(b) and 2.6 hereof
shall survive indefinitely.
9.2 PARTIES IN INTEREST. All covenants, agreements,
representations, warranties and undertakings contained in this Agreement shall
be binding on and shall inure to the benefit of the respective successors and
permitted assigns of the parties hereto (including Permitted Transferees of any
of the Purchased Shares or the Option Shares). Except as may be required to be
disclosed by order of a court or otherwise required by law, the parties agree to
maintain in confidence the terms of the purchase of the Purchased Shares
hereunder, except that the Purchasers may disclose such terms to their investors
in the ordinary course and except that the Company may disclose such terms to
its stockholders, accountants, bankers and advisors in the ordinary course.
9.3 SHARES OWNED BY AFFILIATES. For the purposes of applying all
provisions of this Agreement which condition the receipt of information or
access to information or exercise of any rights upon ownership of a specified
number or percentage of shares, the shares owned of record by any Affiliate of a
Purchaser shall be deemed to be owned by such Purchaser.
9.4 AMENDMENTS AND WAIVERS. Amendments or additions to this
Agreement may be made and compliance with any term, covenant, agreement,
condition or provision set forth herein may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
upon the written consent of the Company and the Purchasers. This Agreement
(including the Schedules and Exhibits annexed hereto, which are an integral part
of this Agreement) constitutes the full and complete agreement of the parties
with respect to the subject matter hereof and supersedes all prior agreements
and understandings with respect to the subject matter hereof, including without
limitation the Letter of Intent among the parties hereto, dated June 21, 2000.
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9.5 NOTICES. All notices, requests, consents, reports and demands
shall be in writing and shall be hand delivered, sent by facsimile or other
electronic medium, or mailed, postage prepaid, to the Company or to the
Purchaser at the address set forth below or to such other address as may be
furnished in writing to the other parties hereto:
The Company: TheStreet.com, Inc.
14 Wall Street, 14th Floor
New York, New York 10005
Tel: (212) 321-5000
Attention: Jordan Goldstein, Esq.
Fax: (212) 321-5013
E-mail: [email protected]
with copy to: Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
Attention: Kenneth A. Lefkowitz, Esq.
Tel: (212) 837-6000
Fax: (212) 422-4726
E-mail: [email protected]
Go2Net: Go2Net, Inc.
Pier 70
2801 Alaskan Way, Suite 200
Seattle, Washington 98121
Attention: General Counsel
Tel: (206) 447-1595
Fax: (206) 447-1625
E-mail: [email protected]
with copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Francis J. Feeney, Jr., Esq.
Tel: (617) 951-6600
Fax: (617) 951-1295
E-mail: [email protected]
Vulcan: Vulcan Ventures Inc.
110 110th Avenue, N.E., Suite 550
Bellevue, Washington 98004
Attention: Diane Daggatt
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Tel: (425) 453-1940
Fax: (425) 453-1985
E-mail: [email protected]
with a copy to: Cooley Godward LLP
5200 Carillon Point
Kirkland, Washington 98033-7356
Attention: Christopher Wright, Esq.
Tel: (425) 893-7700
Fax: (425) 893-7777
E-mail: [email protected]
All such notices, request, demands, consents and other communications
shall be deemed to have been duly given or sent seven (7) days following the
date on which mailed, or on the date on which delivered by hand, by facsimile
transmission or e-mail (receipt confirmed), as the case may be, and addressed as
aforesaid.
9.6 EXPENSES. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, PROVIDED, HOWEVER, that in
the event that the transactions contemplated hereby are consummated, the Company
shall pay the Purchasers' reasonable costs and expenses (including reasonable
fees and expenses of its legal counsel and accountants) in connection with the
investigation, preparation, execution and delivery of this Agreement (and due
diligence related thereto) and the other instruments and documents to be
delivered hereunder and the transactions contemplated hereby and thereby on the
Closing Date up to Fifty Thousand Dollars ($50,000).
9.7 COUNTERPARTS. This Agreement and any exhibit hereto may be
executed in multiple counterparts, each of which shall constitute an original
but all of which shall constitute but one and the same instrument. One or more
counterparts of this Agreement or any exhibit hereto may be delivered via
telecopier, with the intention that they shall have the same effect as an
original counterpart hereof.
9.8 EFFECT OF HEADINGS. The article and section headings herein
are for convenience only and shall not affect the construction or interpretation
hereof.
9.9 INTENTIONALLY OMITTED.
9.10 GOVERNING LAW. The parties hereby agree that this Agreement,
and the respective rights, duties and obligations of the parties hereunder,
shall be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law thereunder.
Each of the parties hereby (i) irrevocably consents and agrees that any legal or
equitable action or proceeding arising under or in connection with this
Agreement shall be brought exclusively in the Federal or state courts sitting in
Delaware and any court to which an
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appeal may be taken in any such litigation, and (ii) by execution and delivery
of this Agreement, irrevocably submits to and accepts, with respect to any such
action or proceeding, for itself and in respect of its properties and assets,
generally and unconditionally, the jurisdiction of the aforesaid courts, and
irrevocably waives any and all rights such party may now or hereafter have to
object to such jurisdiction.
9.11 ASSIGNMENT. This Agreement may not be assigned by either of
the Purchasers except that each of the Purchasers has the right to assign or
transfer any of its rights pursuant to this Agreement in connection with (and in
proportion to) its transfer of securities purchased hereunder to any Permitted
Transferee or to any other party with the prior written consent of the Company,
which shall not be unreasonably withheld. The Company may not assign or transfer
any of its rights pursuant to this Agreement unless the Company first obtains
the express written consent of the Purchasers. Any assignment in violation of
the terms of this Agreement shall be null and void AB INITIO.
9.12 REMEDIES. The Company stipulates that the remedies at law of
the Purchasers in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of Section 1.2 hereof
are not and will not be adequate, and that such terms may be specifically
enforced by a decree for the specific performance of any provision of Section
1.2 or by an injunction against a violation of any of the terms thereof or
otherwise.
9.13 HSR ACT. On or before any Option Closing Date, all required
filings (if necessary) under the HSR Act shall have been made by the parties
required to do so, and any waiting period (and any extension thereof) under the
HSR Act, applicable to the transactions contemplated hereby shall have expired
or shall have terminated and neither the Company nor the applicable Purchaser
shall be subject to any injunction or temporary restraining order against
consummation of the transactions contemplated hereby.
9.14 WAIVER OF JURY TRIAL. Each of the Company, Go2Net and Vulcan
hereby expressly waives its respective rights to a jury trial of any claim or
cause of action based upon or arising out of this Agreement, any other related
agreements or any dealings between them relating to the subject matter of this
Agreement. The Company and the Purchasers also waive any bond or surety or
security upon such bond which might, but for this waiver, be required of any
party. The scope of this waiver is intended to be all encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
The Company and the Purchasers further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each voluntarily waives
its jury trial rights following consultation with legal counsel. This waiver is
irrevocable and may only be modified either orally or in amendments, renewals,
supplements or modifications to this agreement, any other related agreement or
the purchased shares. In the event of litigation, this agreement may be filed as
a written consent to a trial (without a jury) by the court.
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9.15. RESTRICTIONS ON ACTIONS. (a) Except for the Purchased Shares,
Option Shares and as permitted by this Section 9.15, each Purchaser agrees that
until the earlier of (i) the third anniversary of the date of this Agreement,
(ii) the termination or expiration of the Co-Branding and Marketing Agreement
(unless due to a breach by Go2Net of its obligations thereunder) or (iii) the
date on which such Purchaser no longer owns any Purchased Shares or Option
Shares, without the prior consent of the Board of Directors of the Company, it
will not at any time, nor will it permit any of its Subsidiaries or Affiliates
to, acquire directly or indirectly, by purchase or otherwise, record ownership
or beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act
) of any voting securities of the Company (other than the Purchased Shares, the
Option and the Option Shares), or rights or options to acquire, or securities
convertible into or exchangeable for, any such voting securities (such voting
securities other than the Purchased Shares, the Option and the Option Shares),
and such rights, options and convertible or exchangeable securities (other than
the Option), being herein defined as "Other Securities"; provided that the term
"Other Securities" shall not include any voting securities of the Company or any
rights or options to acquire, or securities convertible into or exchangeable
for, any such voting securities including, without limitation, the Option
Shares, which a Purchaser may acquire as a result of any distribution by the
Company to holders of its capital stock generally and such Purchaser receives
such Other Securities solely in its capacity as a holder of capital stock of the
Company.
(b) The Purchasers agree that, without the prior consent
of the Board of Directors of the Company, neither of them will at any time, nor
will a Purchaser permit any subsidiaries or Affiliates to: (i) solicit proxies
to vote any securities of the Company under any circumstances for a change in
the directors or management of the Company, or in connection with a merger or
acquisition of the Company, or deposit any securities of the Company in a voting
trust or subject them to a voting agreement or other agreement of similar
effect; (ii) initiate, propose, or otherwise solicit any stockholder of the
Company for the approval of, or induce or attempt to induce any other person to
initiate any stockholder proposal for a change in the directors or management of
the Company or in connection with a merger or acquisition of the Company; or
(iii) take any action individually or jointly with any Person or group, or
assist any Person or group in taking any action, which it could not take
individually under the terms of this section.
(c) The preceding provisions in this Section 9.15 shall
terminate in the event that the Board of Directors of the Company shall (i)
approve a tender offer for a majority of the outstanding capital stock of the
Company; (ii) liquidate the Company or sell all or substantially all of the
assets of the Company to another Person; (iii) approve a merger or consolidation
of the Company with any other Person that would result in the voting securities
of the Company outstanding immediately prior thereto representing less than a
majority of the voting power to elect a majority of the board of directors or
similar body of the Person surviving such merger or resulting from such
consolidation; or (iv) sell or otherwise issue to any person voting securities
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of the Company having a majority of the combined Voting Power of the voting
securities of the Company where Voting Power means the power to vote in the
election of directors generally.
(d) In the event of any action by the Board of Directors
of the Company described in the Section 9.15(c), the Company shall notify each
Purchaser at least fifteen (15) days prior to the final approval of such
transaction. All of the provisions of this subsection shall be reinstated and
shall apply in full force according to their terms in the event that: (x) if the
preceding provisions of this Article shall have terminated as a result of a
tender offer under clause (c)(i) above, such tender offer (as originally made or
as extended or modified) shall have terminated (without any securities being
accepted thereunder for purchase) prior to the commencement of a tender offer by
any Purchaser or any of its subsidiaries or Affiliates that would have been
permitted pursuant to clause (c)(i) as a result of such third-party tender
offer; (y) any tender offer by any Purchaser or any of its subsidiaries or
Affiliates (as originally made or as extended or modified) that was permitted to
be made pursuant to clause (c)(ii) through (iv) shall have terminated (without
any securities being accepted thereunder for purchase); or (z) if the preceding
provisions of this Article shall have terminated as a result of clause (c)(ii)
through (iv), the Board of Directors of the Company shall have determined to
rescind or abandon the previous action described in clause (c)(ii) through (iv)
(and no such action shall have closed). Upon reinstatement of the provisions of
this Section 9.15, the preceding provisions of this Section 9.15 shall continue
to govern, including, without limitations, those that provide for the
termination of the preceding provisions of this Section 9.15 in the event that
any of the events described in clause (c) shall occur.
(e) This Section 9.15 shall not be applicable to any
Purchased Shares and/or Option Shares sold by a Purchaser or an Permitted
Transferee pursuant to a registration statement filed by the Company or under
the Securities Act, or Rule 144.
9.16 RIGHT OF FIRST REFUSAL. If a Purchaser proposes to sell,
transfer or assign any of its Purchased Shares or Option Shares on or before
August 7, 2001 then prior to such sale, transfer or assignment, such Purchaser
shall give written notice to the Company of such transfer, sale or assignment
for purposes of offering the Company the opportunity to purchase such Purchase
Shares or Option Shares on the same terms and conditions as set forth in such
offer to purchase (the "Notice"). The Notice shall describe in reasonable detail
the proposed transfer including: (i) the number of Purchased Shares or Option
Shares to be transferred, (ii) the nature of such Transfer, and (iii) if such
transfer is to be done by a private placement, then the name and address of each
prospective purchaser or transferee and the consideration to be paid for the
Purchased Shares or Option Shares. If the Purchaser desires to sell any of the
Purchased Shares or Option Shares to the public pursuant to a registration
statement filed with and declared effective by the Commission under the
Securities Act then the applicable price per share shall be the closing price of
the Common Stock on the Nasdaq National Market on the date of the Notice
(reduced by an amount per share equal to one-half (1/2) of the brokerage
discounts and commissions (or other items constituting compensation to an agent
or broker-dealer and any stock transfer fees (including the cost of all transfer
tax stamps) or underwriting discounts and
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commissions (only to the extent that the Purchaser(s) determine that such sale
should be pursuant to an underwritten offering), if any, that would be due if
such Purchased Shares or Option Shares, as the case may be, were offered in a
registered offering). In the event that within one (1) business day following
its receipt of the Notice, the Company does not notify the Purchaser in writing
of its desire to purchase all, but not less than all, of such Purchased Shares
or Option Shares on the same terms and conditions as set forth in the Notice,
then such Purchaser may sell the Purchased Shares or Option Shares. The Company
shall effect the purchase of the Purchased Shares or Option Shares, including
payment of the purchase price, not more than one (1) business day after delivery
of its notice to the Purchaser that it intends to purchase the Purchased Shares
or Option Shares, and at such time the Purchaser shall deliver to the Company
the certificate(s) representing the Purchased Shares or Option Shares to be
purchased by the Company, each certificate to be properly endorsed for transfer.
The Purchased Shares or Option Shares so purchased shall thereupon be cancelled
and cease to be issued and outstanding shares of the Company's Common Stock.
Notwithstanding the foregoing, the right of first refusal of the Company set
forth in this Section 9.16 shall not apply to any assignment or transfer to any
Permitted Transferee. Notwithstanding the foregoing, in the event that one or
both of the Founders determines to sell all or a portion of the capital stock of
the Company owned by such Founder on or before August 7, 2001 then this Section
9.16 shall not prohibit either of the Purchasers from also selling a portion of
the Purchased Shares and/or the Option Shares owned by such Purchaser equal to
the same percentage of such Purchaser's total number of Purchased Shares and/or
Option Shares as sold by such Founder in relation to the total number of shares
of capital stock owned by such Founder.
9.17 EMPLOYMENT AGREEMENTS. On or before the tenth day following
the Closing Date, the Company shall enter into an employment agreement, in form
and substance reasonably acceptable to each of the Purchasers, with each of the
following individuals: Thomas J. Clarke, David Kansas, Richard Auletta, Jason
Young, Jonathan Krim, Geoff Lewis, Erle Norton and John J. Edwards III.
9.18 KNOWLEDGE. For purposes of this Agreement, the term
"knowledge" means, as to the Company or any of its subsidiaries, the collective
actual knowledge of Thomas J. Clarke, David Kansas, Lisa Mogensen, Bryan Levine
and Jordan Goldstein after due inquiry and a review of the Company's books and
records.
* * * * * *
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THESTREET.COM, INC.
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be duly executed and delivered as an instrument under seal as of
the date first above written.
THE COMPANY:
THESTREET.COM, INC.
By: /s/ Thomas J. Clarke
------------------------------------
Name: Thomas J. Clarke
Title: Chief Executive Officer
PURCHASERS:
GO2NET, INC.
By: /s/ Michael J. Riccio, Jr.
------------------------------------
Name: Michael J. Riccio, Jr.
Title: Chief Operating Officer
VULCAN VENTURES INC.
By: /s/ William D. Savoy
------------------------------------
Name: William D. Savoy
Title: President
S-1
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
PURCHASER NUMBER OF SHARES AGGREGATE
--------- ---------------- PURCHASE PRICE
--------------
<S> <C> <C>
Go2Net, Inc. 670,167 $3,726,128.52
Vulcan Ventures Inc. 670,167 $3,726,128.52
</TABLE>
