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SECURITIES PURCHASE AGREEMENT
dated as of
April 25, 2000
between
E-LOAN, INC.
and
CERTAIN PURCHASERS
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of April 25, 2000, by and among E-LOAN, INC., a Delaware corporation (the "Company"), and the parties referred to as "Purchasers" on the signature page(s) o
R E C I TA L S:
WHEREAS, the Company has authorized the issuance and sale of certain shares of its common stock in exchange for certain consideration; and
WHEREAS, the Purchasers desire to purchase and the Company desires to sell common stock on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements, the Company and the Purchasers hereby agree as follows:
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers that except as set forth on Schedule II hereto (which schedule shall note the section of this Article II to which such exception refers and any such exception shall apply only to the section so referenced):
"Tax" or "Taxes" shall mean all federal, state, county, local, municipal, foreign and other taxes, assessments, duties or similar charges of any kind whatsoever, including all corporate franchise, income, sales, use, ad valorem, receipts, value added, profits, license, withholding, payroll, employment, excise, premium, property, customs, net worth, capital gains, transfer, stamp, documentary, social security, environmental, alternative minimum, occupation, recapture and other taxes, and including all interest, penalties and additions imposed with respect to such amounts, and all amounts payable pursuant to any agreement or arrangement with respect to Taxes.
"Taxing Authority" shall mean any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising tax regulatory authority.
"Tax Return" or "Tax Returns" shall mean all returns, declarations of estimated tax payments, reports, estimates, information returns and statements, including any related or supporting information with respect to any of the foregoing, filed or to be filed with any Taxing Authority in connection with the determination, assessment, collection or administration of any Taxes.
Each Purchaser represents and warrants to the Company, severally and not jointly, as follows:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, or (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES."
SECTION 3.04. Removal of Legend. The Purchaser understands and agrees that any legend endorsed on a certificate or instrument evidencing the Shares shall be removed, and the Company shall issue a certificate or instrument without such legend to the holder of such security only (a) if such security is being disposed of pursuant to registration under the Act and any applicable state acts or pursuant to Rule 144 or any similar rule then in effect or (b) if such holder provides the Company with an opinion of counsel satisfactory to it to the effect that a sale, transfer, assignment, offer, pledge or distribution for value of such security may be made without registration and that such legend is not required to satisfy the applicable exemption from registration.
SECTION 3.05. Acts and Proceedings. This Agreement has been duly authorized by all necessary action on the part of the Purchaser, has been duly executed and delivered by the Purchaser, and is a valid and binding agreement upon the part of the Purchaser.
SECTION 3.06. No Brokers or Finders. No person, firm or corporation has or will have, as a result of any act or omission by the Purchaser, any right, interest or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by the Transaction Documents. The Purchaser will indemnify and hold the Company harmless against any and all liability with respect to any such commission, fee or other compensation which may be payable or determined to be payable as a result of the actions of the Purchaser in connection with the transactions contemplated by the Transaction Documents.
SECTION 4.01. Sales. Each Purchaser, severally and not jointly, covenants that it will not sell or otherwise transfer any of the Shares acquired by it hereunder other than pursuant to (i) Rule 144 or any similar or analogous rule or rules or (ii) an effective registration under the Act or in a transaction which, in the opinion of counsel reasonably satisfactory to the Company, qualifies as an exempt transaction under the Act and the rules and regulations promulgated thereunder.
SECTION 4.02. Six-Months Lockup. During the period beginning on the Closing Date and ending six months thereafter, each Purchaser agrees not to (a) offer, pledge, sell or contract to sell the Shares; sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase in connection with the Shares; or otherwise transfer or dispose of, directly or indirectly, the Shares; or (b) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of the Shares (regardless of whether any transaction described in clause (a) or (b) is to be settled by the delivery of the Shares, in cash or otherwise), without the prior written consent of the Company; provided, however, that the provisions of this Section shall not apply to transactions between a Purchaser, on the one hand, and any Affiliate of the Purchaser, on the other hand; provided that, such Affiliate agrees in writing to be bound by the terms of this Agreement to the same extent as such Purchaser. Notwithstanding any other provision of this Agreement, FT Ventures may assign up to 666,666 Shares (less the number of Shares for which interests have previously been assigned pursuant to Section 1.03 of this Agreement) (as appropriately adjusted for stock splits, stock dividends, combinations, and other recapitalizations of the Company's share capital) issued pursuant to this Agreement to another venture capital fund, provided that the representations and warranties set forth in Article III are true with regard to each such assignee, the Company has approved such assignment, which approval may not be unreasonably withheld, and each such assignee shall agree to be bound by the terms of this Agreement. Notwithstanding any other provision of this Agreement, each of FT Ventures, TPF and Benchmark may assign any of the shares of Common Stock issued pursuant to this Agreement to any of its general or limited partners, provided that the representations and warranties set forth in Article III are true with regard to each such assignee and each such assignee shall agree to be bound by the terms of this Agreement.
Conditions
The Company covenants and agrees with the Purchasers as follows:
MISCELLANEOUS
"Act" has the meaning assigned to such term in Section 2.12.
"Affiliate" means, (i) with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified or (ii) any "employee investment partnership" sponsored by Purchaser or any Person as described in clause (i) of this definition.
"Bank Act" has the meaning assigned to such term in Section 2.25.
"Benchmark" Benchmark Capital Partners IV, L.P., Benchmark Founders' Fund IV, L.P. and Benchmark Founders' Fund IV-A, L.P.
"By-Laws" means the bylaws of the Company currently in force and effect and filed with the SEC as an exhibit to the Company's filings in SEC Documents under the Act or the Exchange Act.
"Certificate of Incorporation" means the certificate of incorporation of the Company currently in force and effect and filed with the SEC as an exhibit to the Company's filings in SEC Documents under the Act or the Exchange Act.
"Closing" has the meaning assigned to such term in Section 1.02.
"Closing Date" has the meaning assigned to such term in Section 1.02.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Common Stock" means the common stock, par value $0.001 per share, of the Company.
"Company" means E-Loan, Inc., a Delaware corporation.
"Contracts" has the meaning assigned to such term in Section 2.12.
"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"dollars" or "$" refers to lawful money of the United States of America.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Company directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Company, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Company or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Company or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Exchange Act" has the meaning assigned to such term in Section 2.12.
"Financial Officer" means the chief financial officer, principal accounting officer, treasurer or controller of the Company.
"Financial Statements" has the meaning assigned to such term in Section 2.13.
"FT Ventures" shall collectively mean Financial Technology Management, L.L.C., Financial Technology Ventures (Q), L.P. and Financial Technology Ventures, L.P. and for purposes of this Agreement the three entities shall be treated as a single entity. To the extent that notice is required to be given, consent obtained or information provided to FT Ventures, FT Ventures shall mean Financial Technology Ventures, L.P. or such other of the three entities listed in this definitions as Financial Technology Management Company, L.L.C. shall notify the Company in writing.
"GAAP" means generally accepted accounting principles in the United States of America.
"Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity, whether foreign or domestic, exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
"Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
"HSR Act" has the meaning assigned to such term in Section 2.25.
"Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind; (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments; (c) all obligations of such Person upon which interest charges are customarily paid; (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person; (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business); (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed; (g) all guarantees by such Person of Indebtedness of others; (h) all capital lease obligations of such Person; (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty; and (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
"Legal Requirements" has the meaning assigned to such term in Section 2.11.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
"Majority Purchasers" has the meaning assigned to such term in Section 1.02.
"Marketing Agreement" has the meaning assigned to such term in Section 2.25.
"Material Adverse Effect" means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Company and its subsidiaries taken as a whole, (b) the ability of the Company to perform any of its obligations under this Agreement or any of the other Transaction Documents or (c) the rights of or benefits available to Purchaser under this Agreement or any of the other Transaction Documents.
"Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Nasdaq National Market" shall mean the Nasdaq National Market.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
"Permits" has the meaning assigned to such term in Section 2.11.
"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Company or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Regulation Y" has the meaning assigned to such term in Section 2.25.
"Rights Agreement" has the meaning assigned to such term in Section 2.03.
"Schwab" has the meaning assigned to such term in Section 2.25.
"Schwab Warrants" shall mean the warrants dated April 25, 2000, to be granted to Schwab on the earlier of (a) the Closing Date or (b) July 31, 2000 and which grant to Schwab the right, under the conditions set forth in the warrants, to acquire 13.1 million shares of Common Stock.
"SEC" has the meaning assigned to such term in Section 2.12.
"SEC Documents" has the meaning assigned to such term in Section 2.17.
"security" or "securities" has the meaning set forth in Section 2(1) of the Act.
"subsidiary" means, with respect to any Person (the "parent") at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
"TPF" has the meaning assigned to such term in Section 1.01.
"Transaction Documents" has the meaning assigned to such term in Section 2.03.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers and members as of the day and year first above written.
"Company":
E-LOAN, Inc.
Name:
Title:
"Purchasers":
The Charles Schwab Corporation Technology Partners Fund VI, L.P.
By: TP Management VI, L.L.C.
By: By:___________________________
Name: Christopher V. Dodds Name: Ira Ehrenpreis
Title: Executive Vice President Title: Managing Member
and Chief Financial Officer
Abbey National Treasury Services Financial Technology Ventures, L.P.
Overseas Holdings Financial Technology Ventures (Q), L.P.
By: Financial Technology Management,
L.L.C., their General Partner
By:_______________________________ By:___________________________
Name: Anna Merrick Name: Scott Wu
Title: Title: Managing Member
Benchmark Capital Partners IV, L.P.
as nominee for
Benchmark Capital Partners IV, L.P.
Benchmark Founders' Fund IV, L.P.
Benchmark Founders' Fund IV-A, L.P.
and related individuals
By: Benchmark Capital Management
Co. IV, L.L.C., their general partner
By:______________________________
Name: Steve Spurlock, Managing Member
SCHEDULE 1.01
Schedule of Purchasers
Purchasers Shares Purchase Price
The Charles Schwab Corporation 2,666,666 $9,999,997.50
101 Montgomery Street
San Francisco, CA 94104
Abbey National Treasury Services 2,666,666 $9,999,997.50
Overseas Holdings
26-28 Dorset Square
London NW1 6QG
United Kingdom
Attention: Christian Dummett
Fax No.: 011-44-207612-3482
Financial Technology Ventures L.P. 95,200 $ 357,000.00
Financial Technology Ventures (Q) L.P. 2,571,466 $9,642,997.50
601 California Street
22nd Floor
San Francisco, CA 94108
Attention: Chuck Ott
Fax No.: (415) 229-3010
Benchmark Capital Partners IV, L.P. 1,333,333 $4,999,998.75
2480 Sand Hill Road
Palo Alto, CA 94025
Attention: Steve Spurlock
Fax No.: (650) 854-8183
Technology Partners Fund VI, L.P. 1,333,333 $4,999,998.75
550 University Avenue
Palo Alto, CA 94301
Attention: Ira Ehrenpreis
Fax No.: (650) 289-9001
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