-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qv7Ss7ElFRTHw6/f9J+Nnan17iDwlgZwRKY9K0n+q4850+K01tHj46IrJUDgCx5e YILxW0/p8M3NdTQwPItYuA== 0001045969-02-000104.txt : 20020414 0001045969-02-000104.hdr.sgml : 20020414 ACCESSION NUMBER: 0001045969-02-000104 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020128 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: WEBB INTERACTIVE SERVICES INC CENTRAL INDEX KEY: 0001011901 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 841293864 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-50335 FILM NUMBER: 02519069 BUSINESS ADDRESS: STREET 1: 1899 WYNKOOP SUITE 600 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032969200 MAIL ADDRESS: STREET 1: 1899 WYNKOOP SUITE 600 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: ONLINE SYSTEM SERVICES INC DATE OF NAME CHANGE: 19960410 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JONA INC CENTRAL INDEX KEY: 0001166139 IRS NUMBER: 830323119 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: PO BOX 949 CITY: CASPER STATE: WY ZIP: 82602 BUSINESS PHONE: 3072340583 MAIL ADDRESS: STREET 1: PO BOX 949 CITY: CASPER STATE: WY ZIP: 82602 SC 13D 1 dsc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ________)* Webb Interactive Services, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, no par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 94748P 10 4 - -------------------------------------------------------------------------------- (CUSIP Number) Jean M. Davis Gray Plant Mooty 33 South Sixth Street, Suite 3400 Minneapolis, MN 55402 (612) 343-2800 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 17, 2002 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 94748P 10 4 - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Jona, Inc. 83-0323119 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) ** (a) ................................................... (b) ................................................... ** Joint Filing - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) WC - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ...................... - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Wyoming - -------------------------------------------------------------------------------- 7. Sole Voting Power -0-** Number of ---------------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 2,260,000 (includes 1,160,000 Owned by shares that may be acquired upon exercise of a common Each stock purchase warrant)** Reporting ---------------------------------------------------------------- Person With 9. Sole Dispositive Power -0-** --------------------------------------------------------------- 10. Shared Dispositive Power 2,260,000 (includes 1,160,000 shares that may be acquired upon exercise of a common stock purchase warrant)** - -------------------------------------------------------------------------------- ** See Item 5. 2 11. Aggregate Amount Beneficially Owned by Each Reporting Person 2,260,000(includes 1,160,000 shares that may be acquired upon exercise of a common stock purchase warrant) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) .................. - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 18.1% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) CO - -------------------------------------------------------------------------------- 3 SCHEDULE 13D CUSIP No. 94748P 10 4 - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Neil A. McMurry - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) ** (a) ................................................... (b) ................................................... ** Joint filing - -------------------------------------------------------------------------------- 3. SEC Use Only ........................................... - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) Not applicable (all funds were supplied by Jona, Inc.) - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) .......................................... - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Wyoming - -------------------------------------------------------------------------------- 7. Sole Voting Power -0-** Number of ---------------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 2,275,000 (includes 1,160,000 Owned by shares that may be acquired upon exercise of a common Each stock purchase warrant)** Reporting ---------------------------------------------------------------- Person With 9. Sole Dispositive Power -0-** --------------------------------------------------------------- 4 10. Shared Dispositive Power 2,275,000 (includes 1,160,000 shares that may be acquired upon exercise of a common stock purchase warrant)** **See Item 5. - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 2,275,000 (includes 1,160,000 shares that may be acquired upon exercise of a common stock purchase warrant) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) .................. - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 18.2% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- 5 Item 1. Security and Issuer. The class of equity security to which this schedule relates is Common Stock, no par value, of Webb Interactive Services, Inc. ("Webb"). The name and address of the principal executive offices of the issuer of such securities are Webb Interactive Services, Inc., 1899 Wynkoop, Suite 600, Denver, CO 80202. Item 2. Identity and Background. (a), (b) and (c) Jona, Inc. ("Jona"), 1701 East E. Street, Casper, Wyoming, 82601, is a Wyoming corporation, principally engaged in the business of investing in technology companies- and other lawful businesses. Neil A. McMurry, 1701 East E. Street, Casper, Wyoming, 82601, is an individual, whose principal occupation is as President, Treasurer and Secretary of NERD Gas Company. The principal offices of NERD Gas Company are located at 1701 East E. Street, Casper, Wyoming, 82601. Information is provided below with respect to persons who are directors and executive officers of the reporting persons. Neil A. McMurry, President, Treasurer, Secretary and Director, Jona, Inc., 1701 East E. Street, Casper, Wyoming 82601. (d) and (e) To the knowledge of the reporting persons, none of the reporting persons or any of the persons listed above in this Item 2 has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was, during the last five years, a party to a civil proceeding as a result of which such person was or is subject to a judgment, decree or final order enjoining future violation of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Jona, Inc. is a corporation organized under the laws of the State of Wyoming. Mr. McMurry is a citizen of the United States. Item 3. Source and Amount of Funds or Other Consideration. This schedule relates to a Securities Purchase Agreement entered into as of January 17, 2002 (the "Purchase Agreement") between Jona, Inc. and Webb. Pursuant to the terms of the Purchase Agreement, Jona, Inc. purchased 1,100,000 units (the "Units") of Webb's securities at an aggregate purchase price of $1,100,000, with each Unit consisting of one share of Common Stock of Webb and one warrant to purchase one additional share of Common Stock of Webb (the "Warrants") exercisable at a price of $1.00 per share at any 6 time during the five years following January 17, 2002. The Purchase Agreement contemplates additional purchases by Jona, Inc. of up to $6,400,000 of Units, at a purchase price of $1.00 per Unit, contingent upon the satisfaction of certain conditions by Webb and its subsidiary, Jabber, Inc., including but not limited to, approval of the transactions contemplated by the Purchase Agreement by the shareholders of Webb. Funds for the purchase of the Units, including any shares purchased upon exercise of the Warrants, have been and will be provided out of the working capital of Jona, Inc. Item 4. Purpose of Transaction. Jona, Inc. purchased the Units solely for investment purposes. Based upon their evaluation of Webb's business, prospects and financial condition, market conditions, other opportunities available to Jona, Inc. and other factors they deem material, the reporting persons may seek to acquire additional shares of Common Stock of Webb in the open market or in private transactions, or may dispose of all or any portion of the shares of Common Stock of Webb currently owned or which may be acquired upon exercise of the Warrants. Under the terms of the Purchase Agreement, Jona, Inc. has agreed to purchase a total of 5,000,000 Units at a purchase price of $1.00 per Unit, of which 1,100,000 Units were purchased on January 17, 2002 at the time of the signing of the Purchase Agreement. In addition, the Purchase Agreement grants Jona, Inc. an option to purchase up to an additional 2,500,000 Units at a purchase price of $1.00 per share that expires on August 31, 2002 if not previously exercised. The purchase of the remaining Units under the Purchase Agreement is subject to satisfaction of certain conditions including but not limited to approval of the transactions contemplated by the Purchase Agreement by the shareholders of Webb. Pursuant to the terms of the Purchase Agreement, Webb has agreed to (1) amend its bylaws to require the unanimous consent and approval of all members of the Board of Directors in attendance at a duly convened meeting of the Board of Directors prior to (i) incurring indebtedness for borrowed money, if such borrowing would result in Webb's then outstanding liability for all such then outstanding borrowings to exceed $1,000,000; (ii) taking any actions that results in the redemption of any of Webb's outstanding shares of Common Stock or Preferred Stock; (iii) approving any merger, other corporate reorganization, sale of control of Webb or any transaction in which substantially all of the assets of Webb are sold; or (iv) approving an amendment to or waiving any of the provisions of Webb's articles of incorporation or bylaws; (2) cause two nominees of Jona, Inc. to be elected to the Board of Directors (the "Jona Directors"); and (3) use its best efforts to cause the Jona Directors to be elected to the Board of Directors so long as Jona, Inc. (or its affiliates) beneficially owns 25% or more of Webb's Common Stock. In connection with the purchase of Units, Jona, Inc. loaned Webb $900,000 pursuant to the terms of a promissory note dated as of January 17, 2002 bearing interest at the rate of 10% per annum (the "Note"). In addition, in connection with a letter of intent with respect to the purchase of the Units, Jona, Inc. loaned Webb $300,000 (the "Bridge 7 Loan"). All principal and accrued interest under both the Note and the Bridge Loan is due and payable on demand at any time on or after April 30, 2002. The repayment of the Note and Bridge Loan is secured by an aggregate of 4,800,000 shares of Series C Convertible Preferred Stock of Jabber, Inc., a subsidiary of Webb, presently owned by Webb. In addition, in connection with the Bridge Loan, Jona, Inc. was issued a warrant (the "Bridge Warrants") to purchase 60,000 shares of the Common Stock of Webb at $2.50 per share, which was reduced to $1.00 per share in connection with the purchase of the Units. Except as set forth above or as provided for in the Purchase Agreement, the reporting persons presently do not have definitive plans or proposals that relate to or would result in transactions described in paragraphs (a) through (j) of Item 4 of Schedule 13D, but may, at any time and from time to time, review, reconsider and discuss with Webb or others the reporting persons' positions with respect to Webb that could thereafter result in the adoption of such plans or proposals. Item 5. Interest in Securities of the Issuer. (a) Mr. McMurry, through Jona, Inc., is the beneficial owner of 2,260,000 shares of Common Stock of Webb (including 1,160,000 shares which are not outstanding but which may be purchased upon exercise of the Warrants and the Bridge Warrants). Mr. McMurry, together with has spouse as joint tenants, is the direct owner of 15,000 shares of Common Stock of Webb. The total of such amounts represents approximately 18.2% of the outstanding Common Stock of Webb (assuming the exercise of the Warrants and the Bridge Warrants). To the knowledge of the reporting persons, no other person named in Item 2 beneficially owns any Common Stock of Webb. (b) Mr. McMurry, through Jona, Inc., has the sole power to vote and the sole power to dispose of all shares of Common Stock of Webb beneficially owned by him. Mr. McMurry has the sole power to vote and the sole power to dispose of all shares of Common Stock of Webb directly owned by him and his spouse as a joint tenants. (c) The only transaction in the Common Stock of Webb that was effected by any person named in Section 5(a) above during the past sixty days, are the following: 1. The acquisition of 1,100,000 shares of Common Stock of Webb and Warrants and Bridge Warrants to purchase up to 1,160,000 shares of Common Stock of Webb as reported in Items 3 and 4 above; and 2. On December 28, 2001, Mr. McMurry together with his spouse made the following sales of Common Stock of Webb: 3,000 shares at $0.69 per share; 5,000 shares at $0.70; 500 shares at $0.75 per share; and 6,500 shares at $0.79 per share. The foregoing per share prices exclude commissions. 8 (d) Mr. McMurry's spouse has the right to receive, and the power to direct the receipt of dividends from, or the proceeds of the sale of, the shares of the Common Stock of Webb directly held by Mr. McMurry and his spouse as joint tenants. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. As described in Item 3 above, Jona, Inc. is a party to the Purchase Agreement pursuant to which Jona, Inc. acquired 1,100,000 shares of Common Stock of Webb and Warrants and Bridge Warrants to purchase up to an additional 1,160,000 shares of Common Stock of Webb, and may acquire additional shares of Common Stock of Webb subject to the satisfaction of certain conditions. As part of the transactions contemplated by the Purchase Agreement, Webb and Jona, Inc. entered into a Registration Rights Agreement dated as of January 17, 2002 (the "Registration Agreement") requiring Webb, among other things, to prepare and file with the Securities and Exchange Commission a Registration Statement on Form S-3 on or before May 1, 2002 covering the resale by Jona, Inc. of up to 7,500,000 shares of Common Stock of Webb issued under the Purchase Agreement and up to 7,500,000 shares of Common Stock underlying the Warrants (collectively, the "Registrable Securities"). The Registration Agreement also provides certain incidental registration rights to Jona, Inc. with respect to the Registrable Securities. Item 7. Material to be Filed as Exhibits. Exhibit No. Description - ----------- ----------- 1 Securities Purchase Agreement 2 Warrant to Purchase common Stock 3 Registration Rights Agreement 4 Pledge and Security Agreement 5 Promissory Note 6 Joint Filing Agreement 9 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 28, 2002 JONA, INC. By: /s/ Neil A. McMurry -------------------------------------- Its: President Date: January 28, 2002 /s/ Neil A. McMurry -------------------------------------- Neil A. McMurry 10 EX-1 3 dex1.txt SECURITIES PURCHASE AGREEMENT Exhibit 1 SECURITIES PURCHASE AGREEMENT This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of January 17, 2002, by and between WEBB INTERACTIVE SERVICES, INC., a Colorado corporation (the "Company"), with headquarters located at 1899 Wynkoop, Suite 600, Denver, Colorado 80202, and Jona, Inc. (the "Purchaser"). The Company wishes to sell to the Purchaser, and the Purchaser wishes to buy from the Company, on the terms and subject to the conditions set forth in this Agreement, units (the "Units") of the Company's securities, each Unit consisting of one share of the Company's common stock, no par value (the "Common Stock") and a warrant in the form of Exhibit A hereto (the "Warrant") representing the right to acquire additional shares of Common Stock. The Warrants are exercisable into shares of Common Stock (the "Warrant Shares") in accordance with their respective terms. The Units, the Common Stock, the Warrants and the Warrant Shares are collectively referred to herein as the "Securities". The purchase price for the Securities included in the Units shall be $1.00 for each share of Common Stock sold with no additional payment required for the Warrants. The sale of the Securities by the Company hereunder will be effected in reliance upon the exemption from securities registration afforded by the provisions of Regulation D ("Regulation D") as promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"). The Company has agreed to effect the registration of the Common Stock and the Warrant Shares under the Securities Act pursuant to a Registration Rights Agreement of even date herewith by and between the Company and the Purchaser, the form of which is attached hereto as Exhibit B (the "Registration Rights Agreement"). The Company and the Purchaser hereby agree as follows: 1. PURCHASE AND SALE OF THE COMMON STOCK AND WARRANTS. 1.1 Agreement to Purchase and Sell. Subject to the terms and the satisfaction or waiver of the conditions set forth in this Agreement, the issuance, sale and purchase of the Common Stock and Warrants shall be consummated in one or more separate closings. The first closing is hereinafter referred to as the "First Closing," the second closing is hereinafter referred to as the "Second Closing," and each additional closing (if any) is hereinafter referred to as an "Additional Closing" (each of the First Closing and any Additional Closing is sometimes referred to herein as a "Closing"), and the date on which a Closing occurs is hereinafter referred to as the "Closing Date". a. Subject to the satisfaction or waiver of the conditions set forth in Section 5.1 and Section 5.4 hereof, the First Closing will be deemed to occur when the Company and the Purchaser execute and deliver this Agreement and the other Transaction Documents (as defined below), which delivery may be effected by facsimile transmission, and full payment of the Purchaser's purchase price for the First Closing has been made by wire transfer of immediately available funds against physical delivery by the Company of duly executed certificates representing the Common Stock and Warrant being purchased by the Purchaser at the First Closing. b. Subject to the satisfaction or waiver of the conditions set forth in Section 5.2 and Section 5.5 hereof, on the third (3rd) Business Days (the "Scheduled Second Closing Date") after the Company has notified Purchaser that its shareholders have either approved the completion of an offering for up to $7.5 million of the Company's Securities, including the Securities to be sold at the First Closing, on the terms contemplated in this Agreement or that the Nasdaq Stock Market has advised the Company that such approval is not necessary for the Company's Common Stock to continue to be listed on the Nasdaq Stock Market (the "Nasdaq Notice"); provided, however, that the Nasdaq Notice is given on or before June 30, 2002. The Company shall deliver a notice (the "Second Closing Notice") to the Purchaser prior to the Second Closing (if any) in which the Company shall represent to the Purchaser that the conditions of Section 5.2 hereof have been satisfied or will be satisfied upon the Second Closing. c. During the period commencing with the First Closing and ending on the earlier of August 31, 2002, or five (5) Business Days (as defined herein) following receipt of a Notice to Purchase (as defined herein), Purchaser shall have the right and option (the "Option") to purchase up to an additional 2,500,000 Units for a purchase price of $1.00 per share of Common Stock included with the Units being purchased. In the event that the Company receives a bona fide offer to purchase all or a portion of the additional 2,500,000 Units, the Company shall give the Purchaser written notice thereof (a "Notice to Purchase"). If the Purchaser desires to purchase all of the additional Units to be sold in accordance with the Notice to Purchase, Purchaser must give the Company written notice (a "Purchaser Notice") of Purchaser's election to do so within five (5) Business Days of receipt of the Notice to Purchase. In the event that Purchaser does not give the Company a Purchaser Notice, the Option shall expire to the extent that the Company actually sells additional Units in accordance with the Notice to Purchase. Subject to the satisfaction or waiver of the conditions set forth in Section 5.3 and Section 5.6 hereof, the Company and the Purchaser shall consummate each Additional Closing (if any) on the fifth (5th) Business Day (the "Scheduled Additional Closing Date") after the Purchaser Notice; provided, however, that as of such Scheduled Additional Closing Date, the Company has satisfied all Closing conditions set forth in Section 5.3. The Company shall deliver a notice (the "Additional Closing Notice") to the Purchaser prior to each Additional Closing (if any), in which the Company shall represent to the Purchaser that the conditions set forth in Section 5.3 hereof have been satisfied or will be satisfied upon the Additional Closing Date. d. On the date of the First Closing, subject to the satisfaction or waiver of the conditions set forth in Section 5 hereof, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company (i) 1,100,000 shares of the Company's Common Stock and (ii) a Warrant entitling the holder thereof to purchase 2 1,100,000 Warrant Shares. The aggregate purchase price for the Securities purchased at the First Closing shall be One Million One Hundred Thousand Dollars ($1,100,000). e. On the date of the Second Closing (if any), subject to the satisfaction or waiver of the conditions set forth in Section 5 hereof, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company (i) 3,900,000 shares of the Company's Common Stock; and (ii) a Warrant entitling the holder thereof to purchase 3,900,000 Warrant Shares. The aggregate purchase price for the securities purchased at the Second Closing shall be Three Million Nine Hundred Thousand Dollars ($3,900,000). f. On the date of an Additional Closing (if any), subject to the satisfaction or waiver of the conditions set forth in Section 5 hereof, the Company shall issue and sell to the Purchaser and the Purchaser shall purchase from the Company the full number of Units to be purchased in accordance with the Notice to Purchase. The aggregate purchase price for the Units purchased at an Additional Closing shall be one dollar ($1.00) times the number of shares of Common Stock included with the Units being purchased. 1.2 Form of Payment. At each Closing, the Purchaser shall pay the aggregate purchase price for the Common Stock and Warrant purchased by the Purchaser hereunder at such Closing by wire transfer to the Company, in accordance with the Company's written wiring instructions, against delivery of duly executed Common Stock certificates and a certificate representing the Warrant purchased by the Purchaser at such Closing, and the Company shall deliver such Common Stock certificates and the certificate representing the Warrant purchased by the Purchaser at such Closing against delivery of such aggregate purchase price for such Closing. 1.3 Certain Definitions. When used herein, the following terms shall have the respective meanings indicated: A. "Business Day" shall mean any day on which the New York Stock Exchange (the "NYSE") and commercial banks in the city of New York are open for business. B. "Trading Day" shall mean any day on which the Common Stock is purchased and sold on the principal securities exchange or market on which the Common Stock is then listed or traded. 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The Purchaser hereby represents and warrants to the Company and agrees with the Company that, as of the date of this Agreement, as of the First Closing and as of each Additional Closing: 3 2.1 Authorization; Enforceability. The Purchaser is duly and validly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization with full power and authority to purchase the Securities and to execute and deliver this Agreement. This Agreement and the Registration Rights Agreement each constitutes the Purchaser's valid and legally binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or other laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) or public policy. 2.2 Accredited Investor; Purchase as Principal. The Purchaser is an accredited investor as that term is defined in Rule 501 of Regulation D, and is acquiring the Securities solely for its own account as a principal and not with a present view to the public resale or distribution of all or any part thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act; provided, however, that in making such representation, such Purchaser does not agree to hold any Securities for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of the Securities at any time in accordance with the provisions of this Agreement and with Federal and state securities laws applicable to such sale, transfer or disposition. 2.3 Information. The Company has provided the Purchaser with information regarding the business, operations and financial condition of the Company, and has granted to the Purchaser the opportunity to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the Company and materials relating to the terms and conditions of the purchase and sale of the Securities. Neither such information nor any other investigation conducted by the Purchaser or any of its representatives shall modify, amend or otherwise affect the Purchaser's right to rely on the Company's representations and warranties contained in this Agreement. 2.4 Limitations on Disposition. The Purchaser acknowledges that, except as provided in the Registration Rights Agreement, the Securities have not been and are not being registered under the Securities Act and may not be transferred or resold without registration under the Securities Act or unless pursuant to an exemption therefrom. 2.5 Legend. The Purchaser understands that the certificates representing the Securities may bear at issuance a restrictive legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE 4 SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE." Notwithstanding the foregoing, it is agreed that, as long as (A) the resale or transfer (including without limitation a pledge) of such Securities is registered pursuant to an effective registration statement and the Purchaser represents in writing to the Company that such Securities have been or are being sold pursuant to such registration statement, (B) such Securities have been publicly sold pursuant to Rule 144 ("Rule 144") and the Purchaser has delivered to the Company customary Rule 144 broker's and seller's representation letters, or (C) such Securities can be publicly sold pursuant to Rule 144(k) under the Securities Act, such Securities shall be issued without any legend or other restrictive language and, with respect to Securities upon which such legend is stamped, the Company shall issue new certificates without such legend to the holder promptly upon request. 2.6 No Conflict. The execution, delivery and performance by the Purchaser of this Agreement and the other Transaction Documents (as defined herein) to which it is a party (A) have been approved by all necessary action (corporate or other) on the part of the Purchaser and (B) will not result in (i) any material violation of any provisions of its charter, bylaws or any other governing document in effect on the date hereof, (ii) any material violation of any instrument or contract to which it is a party or by which it is bound, or (iii) the creation of any material lien, charge or encumbrance upon any of its assets. 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company hereby represents and warrants to the Purchaser and agrees with the Purchaser that, as of the date of this Agreement, as of the First Closing and as of each Additional Closing: 3.1 Organization, Good Standing and Qualification. Each of the Company and its subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all requisite corporate power and authority to carry on its business as now conducted. Each of the Company and its subsidiaries is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on the consolidated business or financial condition of the Company and its subsidiaries taken as a whole. For purposes of this Agreement, the term "subsidiary" or "subsidiaries" shall mean any entity or entities in which the Company beneficially owns 20% or more of the voting equity thereof. 3.2 Authorization; Consents. The Company has the requisite corporate power and authority to enter into and perform its obligations under (i) this Agreement, (ii) the 5 Registration Rights Agreement (iii) the Warrants and (iv) all other agreements, documents or other instruments executed and delivered by or on behalf of the Company at each Closing (the instruments described in (i), (ii), (iii) and (iv) being collectively referred to herein as the "Transaction Documents"), to issue and sell Common Stock and Warrants to the Purchaser in accordance with the terms hereof and to issue and deliver Warrant Shares in accordance with the terms of the Warrants. All corporate action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery of, and the performance by the Company of its obligations under, the Transaction Documents has been taken. 3.3 Enforcement. Each of the Transaction Documents constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or other laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) or public policy. 3.4 Disclosure Documents; Agreements; Financial Statements; Other Information. The Company has filed with the Commission: (i) the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000, (ii) Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001, (iii) all Current Reports on Form 8-K, if any, and any other reports, required to be filed with the Commission since December 31, 2000 and prior to the date hereof and (iv) the Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders] (collectively, the "Disclosure Documents"). Except as set forth on Schedule 3.4 hereto, the Company is not aware of any event occurring on or prior to each Closing (other than the transactions effected hereby) that would require the filing of, or with respect to which the Company intends to file, a Form 8-K after such date. Each Disclosure Document, as amended, if applicable, as of the date of the filing thereof with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act") and, as of the date of such filing, such Disclosure Document did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All material agreements required to be filed as exhibits to the Disclosure Documents have been filed or incorporated by reference as required by the applicable provisions of the Exchange Act. Neither the Company nor any of its subsidiaries is in breach of any agreement to which it is a party or by which it is bound where such breach could have a material adverse effect on (i) the consolidated business, operations, properties, financial condition, prospects or results of operations of the Company and its subsidiaries taken as a whole, (ii) the transactions contemplated hereby or by the other Transaction Documents; (iii) the Securities or (iv) the ability of the Company to perform its obligations under this Agreement or the other Transaction Documents (collectively, a "Material Adverse Effect"). Except as set forth in the Disclosure Documents, the Company has no liabilities, contingent or otherwise, other than liabilities incurred in the 6 ordinary course of business which, under generally accepted accounting principles, are not required to be reflected in such financial statements (including the footnotes to such financial statements) and which, individually or in the aggregate, are not material to the consolidated business or financial condition of the Company and its subsidiaries taken as a whole. As of their respective dates, the financial statements of the Company included in the Disclosure Documents have been prepared in accordance with generally accepted accounting principles consistently applied at the times and during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end adjustments). 3.5 Disclosure. All information relating to or concerning the Company set forth in this Agreement or provided to the Purchaser pursuant to paragraph 2.3 hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. 3.6 Capitalization. The capitalization of the Company, including its authorized capital stock, the number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company's stock option plans, the number of shares issuable and reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for any shares of Common Stock and the number of shares initially to be reserved for issuance upon exercise of the Warrants is set forth on Schedule 3.6 hereto. All of such outstanding shares of capital stock have been, or upon issuance will be, validly issued, fully paid and non-assessable. Except as set forth on Schedule 3.6, no shares of the capital stock of the Company are subject to preemptive rights or any other similar rights of the stockholders of the Company or any liens or encumbrances created by or through the Company. Except as disclosed on Schedule 3.6, or as contemplated herein, there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company or any of its subsidiaries, or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries. 3.7 Valid Issuance. The shares of Common Stock are duly authorized and, when issued, sold and delivered in accordance with the terms hereof, (i) will be duly and validly issued, fully paid and non-assessable, free and clear of any taxes, liens, claims, preemptive or similar rights or encumbrances imposed by or through the Company (collectively, "Encumbrances"), and (ii) based in part upon the representations of the Purchaser in this Agreement, will be issued, sold and delivered in compliance with all applicable Federal and state securities laws. The Warrants are duly authorized and, when issued, sold and delivered in accordance with the terms hereof, (i) will be duly and validly issued, fully paid and non-assessable, free and clear of any Encumbrances and (ii) based in part upon the representations of the Purchaser in this Agreement, will be issued, sold and delivered in compliance with all 7 applicable Federal and state securities laws. The Warrant Shares are duly authorized and, upon the issuance thereof in accordance with the terms of the Warrant, will be duly and validly issued, fully paid and non-assessable, free and clear of any Encumbrances. The Company's Board of Directors, by unanimous vote of the directors in attendance at the meeting at which such matters are considered, which directors constitute a quorum, (i) has determined that the issuance and sale of the Common Stock and Warrants hereunder, and the consummation of the transactions contemplated hereby, by the other Transaction Documents (including without limitation the issuance of the Warrant Shares upon exercise of the Warrants), are in the best interests of the Company and (ii) has approved the issuance of Warrant Shares upon exercise of the Warrants. 3.8 No Conflict with Other Instruments. Neither the Company nor any of its subsidiaries is in violation of any provisions of its charter, bylaws or any other governing document as amended and in effect on and as of the date hereof or in default (and no event has occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any instrument or contract to which it is a party or by which it is bound, or of any provision of any Federal, state or foreign judgment, writ, decree, order, statute, rule or governmental regulation applicable to the Company, which violation or default could reasonably be expected to have a Material Adverse Effect. The (i) execution, delivery and performance of this Agreement and the other Transaction Documents, and (ii) consummation of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Common Stock and the Warrants and the reservation for issuance and issuance of the Warrant Shares) will not, in any such case, result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or of any of its subsidiaries or the triggering of any preemptive or anti-dilution rights or rights of first refusal or first offer, or any similar rights (whether pursuant to a "poison pill" provision or otherwise), on the part of holders of the Company's securities, except as set forth on Schedule 3.8. 3.9 Financial Condition; Taxes; Litigation. 3.9.1 The Company's financial condition is, in all material respects, as described in the Disclosure Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not, in the aggregate, materially adverse to the consolidated business or financial condition of the Company and its subsidiaries taken as a whole. There has been no material adverse change to the Company's business, operations, properties, financial condition, prospects or results of operations since the 8 date of the Company's most recent audited financial statements contained in the Disclosure Documents. 3.9.2 The Company has filed all tax returns required to be filed by it and paid all taxes which are due, except for taxes which it reasonably disputes or which could not have a Material Adverse Effect. 3.9.3 Neither the Company nor any of its subsidiaries is the subject of any pending or, to the Company's knowledge, threatened inquiry, investigation or administrative or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction, the Commission or any state securities commission or other governmental or regulatory entity which could have a Material Adverse Effect. 3.9.4 Except as described in the Disclosure Documents, there is no claim, litigation or administrative proceeding pending, or, to the Company's knowledge, threatened or contemplated, against the Company or any of its subsidiaries, or against any officer, director or employee of the Company or any such subsidiary in connection with such person's employment therewith that, individually or in the aggregate, could have a Material Adverse Effect. Neither the Company nor any of its subsidiaries is a party to or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or government agency or instrumentality which could have a Material Adverse Effect. 3.10 Intellectual Property. The Company and its subsidiaries each has the right to use adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property rights necessary to conduct the business now operated by it, and is not aware of any infringement by a third party with respect to such rights or of any infringement by it or conflict with asserted rights of others that, in any such case, if determined adversely to the Company or any of its subsidiaries, could individually or in the aggregate have a Material Adverse Effect. 3.11 Solicitation; Other Issuances of Securities. Neither the Company nor any of its subsidiaries or affiliates, nor any person acting on its or their behalf, (i) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities, (ii) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Securities under the Securities Act or (iii) has issued any shares of Common Stock or shares of any series of preferred stock or other securities or instruments convertible into, exchangeable for or otherwise entitling the holder thereof to acquire shares of Common Stock which would be integrated with the sale of the Securities to such Purchaser. 3.12 Fees. Except as described on Schedule 3.12 hereto, the Company is not obligated to pay any compensation or other fee, cost or related expenditure to any underwriter, broker, agent or other representative or entity in connection with the transactions contemplated hereby. The Company will indemnify and hold harmless such 9 Purchaser from and against any claim by any person or entity alleging that such Purchaser is obligated to pay any such compensation, fee, cost or related expenditure in connection with the transactions contemplated hereby. 3.13 Regulatory Permits. Each of the Company and its subsidiaries possesses all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its business, except where the failure to so possess such certificates, authorizations or permits could not have a Material Adverse Effect, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which revocation or modification could have a Material Adverse Effect. 3.18 Environment. Except as disclosed in the Disclosure Documents (i) there is no environmental liability, nor factors likely to give rise to any environmental liability, affecting any of the properties of the Company or any of its subsidiaries that, individually or in the aggregate, would have a Material Adverse Effect and (ii) neither the Company nor any of the subsidiaries has violated any environmental laws applicable to it now or previously in effect ("Environmental Laws"), other than such violations or infringements that, individually or in the aggregate, have not had and will not have a Material Adverse Effect. 4. COVENANTS OF THE COMPANY 4.1 Corporate Existence. The Company shall, so long as the Purchaser or any affiliate of the Purchaser beneficially owns more than ten percent (10%) of the Company's outstanding shares of Common Stock, maintain its corporate existence in good standing under the jurisdiction of its incorporation and shall pay all taxes owed by it when due except for taxes which the Company reasonably disputes. For the purposes of this Agreement, beneficial ownership and all determinations and calculations shall be determined in accordance with Section 13(d) of the Exchange Act of 1934 and all applicable rules and regulations thereunder. 4.2 Provision of Information. The Company shall, so long as the Purchaser or any affiliate of the Purchaser beneficially owns more than ten percent (10%) of the Company's outstanding shares of Common Stock, provide any the Purchaser with copies of all materials sent to stockholders, in each such case at the same time that it mails such materials to its stockholders. 4.3 Form D; Blue-Sky Qualification. To the extent that the Company is relying on Regulation D under the Securities Act in selling the Securities to the Purchaser hereunder, the Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Purchaser promptly after such filing. The Company shall take such action as is necessary to qualify the Common Stock and Warrants for sale under applicable state or "blue-sky" laws or obtain an exemption 10 therefrom, and shall provide evidence of any such action to the Purchaser at such Purchaser's request. 4.4 Reporting Status. As long as the Purchaser or any affiliate of the Purchaser beneficially owns more than ten percent (10%) of the company's outstanding shares of Common Stock and until the date on which any of the foregoing may be sold to the public pursuant to Rule 144(k) (or any successor rule or regulation), (i) the Company shall timely file with the Commission all reports required to be so filed pursuant to the Exchange Act and (ii) the Company shall not terminate its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. The Company agrees to issue a press release describing the transactions contemplated by this Agreement and the other Transaction Documents and to file with the Commission a Form 8-K in the form required by the Exchange Act describing the terms of the transactions contemplated by this Agreement and the other Transaction Documents, with this Agreement and all schedules and exhibits attached to such Form 8-K as an exhibit thereto, in each case on or before the fifth (5th) Business Day following the date of this Agreement. 4.5 Reservation of Common Stock. The Company shall at all times following each Closing Date have authorized and reserved for issuance to the Purchaser pursuant to the Warrants, free from any preemptive rights, a number of shares of Common Stock equal to the maximum number of Shares of Common Stock issuable upon exercise of the Warrants (the "Reserved Amount"). 4.6 Use of Proceeds. The Company shall use the proceeds from the sale of the Common Stock and Warrants for general corporate purposes only, in the ordinary course of its business and consistent with past practice and, without limiting the generality of the foregoing, shall not use such proceeds to make a loan to any employee, officer, director or stockholder of the Company, to repay any loan or other obligation of the Company to any such person other than the payment of the Company's 10% Convertible Promissory Note or to repurchase or pay a dividend on shares of Common Stock or other capital stock of the Company. 4.7 Quotation on Nasdaq. The Company shall use its reasonable commercial efforts to maintain the designation and quotation, or listing, of the Common Stock on the Nasdaq National or Small Cap Market or the New York Stock Exchange for a minimum of three (3) years following the First Closing. The Company shall file a listing application for the Common Stock and Warrant Shares with the Nasdaq National Market on or before the fifth (5th) Business Day following the date of this Agreement and shall use its best efforts to cause the Common Stock and Warrant Shares to be listed for trading on the Nasdaq National Market as soon as possible. 4.8 Environmental Laws. The Company will take all action necessary in order to comply with applicable Environmental Laws and agrees to indemnify the Purchaser from and against any loss, claim, damage or expense arising from or in connection with any 11 failure or alleged failure of the Company, or any of its subsidiaries or affiliates, to comply with such laws. 4.9 Outstanding Securities. The sale and issuance of the Securities by the Company to Purchaser requires adjustments to the conversion prices and exercise prices of the Company's 10% Convertible Promissory Notes, its Series C-1 Convertible Preferred Stock and certain warrants issued by the Company (collectively, the "Outstanding Securities") to the amounts set forth on Schedule 4.9 hereto and such adjustments are effected as of the date hereof. 4.10 Amendment to Bylaws. Within five (5) Business Days of the First Closing, the Company will cause its Bylaws to be amended to require the unanimous consent and approval of all members of the Board of Directors of the Company in attendance at a duly convened meeting of the Board of Directors prior to (i) incurring indebtedness for borrowed money, if such borrowing would result in the Company's then outstanding liability for all such then outstanding borrowings to exceed $1 million; (ii) taking any action which results in the redemption of any of the Company's outstanding shares of Common Stock or Preferred Stock; (iii) approving any merger, other corporate reorganization, sale of control of the Company or any transaction in which substantially all of the assets of the Company are sold; or (iv) approving an amendment to or waiving any of the provisions of the Company's Articles of Incorporation or Bylaws. The Company shall use its best efforts to see that the representations and warranties of this Section 4.10 remain in full force and affect, so long as the Purchaser or any affiliate of the Purchaser beneficially owns twenty-five percent (25%) or more of the Company's Common Stock. 4.11 Election to the Board of Directors. Within five (5) Business Days of the First Closing, the Company shall cause two nominees of the Purchaser who are reasonably satisfactory to the Company to be elected to the Company's Board of Directors and shall, so long as the Purchaser or any affiliate of the Purchaser beneficially owns twenty-five percent (25%) or more of the Company's Common Stock, use its best efforts to see that two such nominees of the Purchaser are elected to the Company's Board of Directors. 4.12 Adjustment in Number of Shares. In the event that the terms of any funding by the Company during the period between the First Closing and the earliest to occur of (i) the second anniversary of the First Closing, (ii) the raising by the Company of additional proceeds aggregating at least an additional $7.5 million or (iii) the Closing Bid Price (as defined in the Warrant) has exceeded $3.00 for thirty (30) consecutive Trading Days following the Effective Date (as defined in the Registration Rights Agreement) is at an effective offering price ("Effective Price") of less than $1.00 per share of Common Stock, the Company shall issue to Purchaser such number of additional shares of the Company's Common Stock as is necessary to cause the value of the total number of shares of the Company's Common Stock, including such additional shares, delivered in 12 connection with the purchase of the Common Stock to be equal to the total purchase price paid for the Common Stock by the Purchaser, less the amount (if any) received by the Purchaser in connection with the sale or other transfer of Common Stock at a price in excess of $1.00 per share, the value of the Common Stock being based on the Effective Price. If the securities sold in such offering are securities of the Company which are convertible into the Company's Common Stock and no other securities are sold with such convertible securities and the convertible securities do not provide for the payment of interest or dividends, other than dividends payable equally to all of the Company's securities holders, the conversion price for the convertible securities shall be deemed to be the Effective Price. If the funding includes securities other than the Company's Common Stock or securities convertible into the Company's Common Stock, which convertible securities do not entitle the holders thereof to any interest or dividend payments other than those available to all of the Company's securities holders, the company and Purchaser shall negotiate in good faith to determine the Effective Price. If the parties cannot agree on the Effective Price within thirty (30) days of the closing of the funding, the Company and Purchaser shall each indicate in writing what they believe to be the Effective Price and shall submit the determination of the effective Price to arbitration in Denver, Colorado in accordance with the rules of the American Arbitration Association. The determination of the Effective Price pursuant to such arbitration shall be binding on the parties. The party whose stated Effective Price is furthest from the price established in arbitration shall pay the cost of such arbitration. If the difference between the stated Effective Price for each of the parties is equal, the cost of the arbitration shall be borne equally by the parties. 4.13 Intentional Acts or Omissions. The Company shall not intentionally perform any act which if performed, or intentionally omit to perform any act which, if omitted to be performed, would prevent or excuse the performance of this Agreement or any of the transactions contemplated hereby. 5. CONDITIONS TO CLOSING. 5.1 Conditions to Purchaser's Obligations at the First Closing. The Purchaser's obligations at the First Closing, including without limitation its obligation to purchase the Common Stock and Warrant being purchased by the Purchaser, are conditioned upon the satisfaction by the Company (or waiver by the Purchaser) of each of the following events as of the First Closing Date: 5.1.1 the representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of such date as if made on such date; 5.1.2 the Company shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Company on or before the First Closing; 13 5.1.3 the Company shall have delivered to the Purchaser a certificate, signed by an officer of the Company, certifying that the conditions specified in this paragraph 5.1 have been fulfilled as of the First Closing, it being understood that the Purchaser may rely on such certificate as though it were a representation and warranty of the Company made herein; 5.1.4 the Company shall have delivered to the Purchaser duly executed certificates representing the Common Stock and Warrant being purchased by the Purchaser; 5.1.5 the Company shall have executed and delivered the Registration Rights Agreement; 5.1.6 the Company shall have authorized and reserved for issuance the number of shares of Common Stock required to be reserved under paragraph 4.5 hereof, and shall have provided such Purchaser with reasonable evidence thereof; and 5.1.7 since the date of this Agreement, there shall not have occurred, in the reasonable judgment of the Purchaser, any material adverse change in the business, operations, financial condition, properties, prospects or results of operation of the Company. 5.2 Conditions to Purchaser's Obligations at the Second Closing. The Purchaser's obligations at the Second Closing, if any, including without limitation its obligation to purchase the Common Stock and the Warrant to be purchased by the Purchaser, are conditioned upon the satisfaction by the Company (or waiver by the Purchaser) of each of the following events as of the Second Closing: 5.2.1 the First Closing shall have been consummated; 5.2.2 the representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the Second Closing as if made on the Second Closing; 5.2.3 the Company shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Company on or before the Second Closing; 5.2.4 the Company shall (i) have delivered to the Purchaser a certificate, signed by an officer of the Company, certifying that the conditions specified in this paragraph 5.2 have been fulfilled as of the Second Closing, it being understood that the Purchaser may rely on such certificate as though it were a representation and warranty of the Company made herein; (ii) the Company shall have entered into employment 14 agreements with William Cullen, Lindley Branson and Tom Croswell and Messrs Cullen and Branson shall have acknowledged that the transactions contemplated herein do not represent a "change of control" as defined in their existing agreements with the Company; and Jabber shall have completed the installation of the Jabber IM server software at the Purchaser's offices; 5.2.5 the Company shall have delivered to the Purchaser duly executed certificates representing the Common Stock and Warrant to be purchased by the Purchaser at the Second Closing; and 5.2.6 since the date of this Agreement, there shall not have occurred, in the reasonable judgment of the Purchaser, any material adverse change in the business, operations, financial condition, properties, prospects or results of operation of the Company. 5.3 Conditions to Purchaser's Obligations at an Additional Closing. The Purchaser's obligations at each Additional Closing, if any, including without limitation its obligation to purchase the Common Stock and the Warrant to be purchased by the Purchaser, are conditioned upon the satisfaction by the Company (or waiver by the Purchaser) of each of the following events as of such Additional Closing: 5.3.1 the Second Closing shall have been consummated; 5.3.2 the representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of such Additional Closing as if made on such Additional Closing; 5.3.3 the Company shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Company on or before such Additional Closing; 5.3.4 the Company shall have delivered to the Purchaser a certificate, signed by an officer of the Company, certifying that the conditions specified in this paragraph 5.3 have been fulfilled as of such Additional Closing, it being understood that the Purchaser may rely on such certificate as though it were a representation and warranty of the Company made herein; 5.3.5 the Company shall have delivered to the Purchaser duly executed certificates representing the Common Stock and Warrant to be purchased by the Purchaser at such Additional Closing; and 5.3.6 since the date of this Agreement, there shall not have occurred, in the reasonable judgment of the Purchaser, any material adverse change in the business, 15 operations, financial condition, properties, prospects or results of operation of the Company. 5.4 Conditions to Company's Obligations at the First Closing. The Company's obligations at the First Closing are conditioned upon the satisfaction (or waiver by the Company) of each of the following events as of the First Closing: 5.4.1 the representations and warranties of the Purchaser shall be true and correct in all material respects as of such date as if made on such date; and 5.4.2 the Purchaser shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Purchaser on or before the First Closing. 5.5 Conditions to Company's Obligations at the Second Closing. The Company's obligations at the Second Closing, if any, are conditioned upon the satisfaction (or waiver by the Company) of each of the following events as of the Second Closing: 5.5.1 the representations and warranties of the Purchaser shall be true and correct in all material respects as of such date as if made on such date; 5.5.2 the Company's shareholders shall have approved the sale of up to $7.5 million of the Company's Securities as contemplated herein or the Nasdaq Stock Market shall have notified the Company that such approval is not required for the Company's Common Stock to continue to be listed on the Nasdaq Stock Market; and 5.5.3 the Purchaser shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Purchaser on or before the Additional Closing. 5.6 Conditions to Company's Obligations at Each Additional Closing. The Company's obligations at an Additional Closing, if any, are conditioned upon the satisfaction (or waiver by the Company) of each of the following events as of the Additional Closing: 5.6.1 the representations and warranties of the Purchaser shall be true and correct in all material respects as of such date as if made on such date; and 5.6.2 the Purchaser shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Purchaser on or before the Additional Closing. 16 6. MISCELLANEOUS. 6.1 Survival. The representations and warranties made by the parties herein shall survive the Closing notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely thereon. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that in such case the parties shall negotiate in good faith to replace such provision with a new provision which is not illegal, unenforceable or void, as long as such new provision does not materially change the economic benefits of this Agreement to the parties. The Company agrees that it will indemnify and hold harmless the Purchaser for any loss, claim, liability, damage or expense, as incurred by such Purchaser, arising out of or in connection with (a) a breach by the Company of any representation, warranty or agreement made herein or in any other Transaction Document, (b) any cause of action, suit or claim brought or made against such indemnitee (other than directly by the Company solely for breach of this Agreement, the Warrants or the Registration Rights Agreement by the indemnitee or by governmental or regulatory authorities), and arising out of or resulting from (whether in whole or in part) the execution, delivery, performance or enforcement of this Agreement or any other Transaction Document), any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities or the status of the Purchaser as an investor in the Company, except to the extent that such actual loss or damage results from a breach by such indemnitee of this Agreement, the Warrants or the Registration Rights Agreement or from a Purchaser's violation of law, or (c) any characterization concerning any Transaction Document other than as expressly provided herein or therein, as the case may be, including, without limitation, any characterization that the exercise of Purchaser rights and remedies under any of the Transaction Documents (or through a combination) results in a Purchaser acting (or agreeing to act) other than independently and on its own behalf. The right to indemnification shall include the right to advancement of expenses as they are incurred. 6.2 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Purchaser may assign its rights and obligations hereunder, in connection with any private sale or transfer of Securities pursuant to Section 2.4, as long as, as a condition precedent to such transfer, the transferee executes an acknowledgment agreeing to be bound by the applicable provisions of this Agreement, in which case the term "Purchaser" shall be deemed to refer to such transferee as though such transferee were an original signatory hereto. The Company may not assign it rights or obligations under this Agreement except as may be specifically provided by this Agreement or the other Transaction Documents. 17 6.3 No Reliance. Each party acknowledges that (i) it has such knowledge in business and financial matters as to be fully capable of evaluating this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, (ii) it is not relying on any advice or representation of the other party in connection with entering into this Agreement, the other Transaction Documents or such transactions (other than the representations made in this Agreement or the other Transaction Documents), (iii) it has not received from such party any assurance or guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this Agreement or the other Transaction Documents or the performance of its obligations hereunder and thereunder, and (iv) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and has entered into this Agreement and the other Transaction Documents based on its own independent judgment and on the advice of its advisors as it has deemed necessary, and not on any view (whether written or oral) expressed by such party. 6.4 Injunctive Relief. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the event of any such breach, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate and specific performance of such obligations without the necessity of showing economic loss. 6.5 Governing Law; Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of Colorado without regard to the conflict of laws provisions thereof. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City of Denver, Colorado for the adjudication of any dispute hereunder or under any Transaction Document or in connection herewith or therewith or with any transaction contemplated hereby or thereby or discussed herein or therein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. 6.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 6.7 Headings; Drafting. The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this 18 Agreement. The parties shall be deemed to have participated jointly in the drafting of this Agreement and the other Transaction Documents, and no provision hereof or thereof shall be construed against any party as the drafter thereof. 6.8 Notices. Any notice, demand or request required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing and shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original to follow) on or before 5:00 p.m., mountain time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed to the parties as follows: If to the Company: WEBB Interactive Services, Inc. 1899 Wynkoop, Suite 600 Denver, Colorado 80202 Telecopy: (303) 295-3584 Attention: William R. Cullen with a copy to: Gray, Plant, Mooty, Mooty & Bennett, P.A. 3400 City Center 33 South Sixth Street Minneapolis, MN 55402-3796 Telecopy: (612) 333-0066 Attention: Lindley S. Branson, Esq. and if to the Purchaser: JONA, INC. P.O. Box 949 Casper, WY 82602 Telecopy: _________________ Attention: Neil A. McMurry 6.9 Expenses. The Company and the Purchaser each shall pay all costs and expenses that it incurs in connection with the negotiation, execution, delivery and performance of this Agreement. 6.10 Entire Agreement; Amendments; Waiver. This Agreement and the other Transaction Documents constitute the entire agreement between the parties with regard to 19 the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the Purchaser. * * * * * IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first-above written. WEBB INTERACTIVE SERVICES, IN By: /s/ Lindley S. Branson ---------------------------------------- Name: Lindley S. Branson Title: Vice President and General Counsel JONA, INC. By: /s/ Neil A. McMurry -------------------------------------- Name: Neil A. McMurry Its: President 20 EX-2 4 dex2.txt WARRANT TO PURCHASE COMMON STOCK Exhibit 2 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER. Warrant to Purchase Issue Date: January 17, 2002 1,100,000 Shares WEBB INTERACTIVE SERVICES, INC. WARRANT TO PURCHASE COMMON STOCK THIS CERTIFIES that JONA, INC. or any subsequent holder hereof (the "Holder"), has the right to purchase from WEBB INTERACTIVE SERVICES, INC., a Colorado corporation (the "Company"), up to 1,100,000 (the "Initial Shares") fully paid and non-assessable shares of the Company's common stock, no par value (the "Common Stock"), subject to adjustment as provided herein, at a price equal to the Exercise Price (as defined below), at any time beginning on the date on which this Warrant is issued (the "Issue Date") and ending at 5:00 p.m., mountain time, on the date that is the fifth (5th) anniversary of the Issue Date (the "Expiration Date"). This Warrant is issued, and all rights hereunder shall be, subject to all of the conditions, limitations and provisions set forth herein and in the related Securities Purchase Agreement by and between the Company and the Holder (the "Securities Purchase Agreement"). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Securities Purchase Agreement, including the exhibits thereto. 1. Exercise. (a) Right to Exercise; Exercise Price. The Holder shall have the right to exercise this Warrant at any time and from time to time during the period beginning on the Issue Date and ending on the Expiration Date as to all or any part of the shares of Common Stock covered hereby (the "Warrant Shares"). The "Exercise Price" payable by the Holder in connection with the exercise of this Warrant shall initially be $1.00 per share, subject to adjustment for the events specified in Section 6 below. (b) Exercise Notice. In order to exercise this Warrant, the Holder shall send by facsimile transmission, at any time prior to 5:00 p.m., mountain time, on the Business Day (as defined below) on which the Holder wishes to effect such exercise (the "Exercise Date"), to the Company a copy of the notice of exercise in the form attached hereto as Exhibit A (the "Exercise Notice") stating the number of Warrant Shares as to which such exercise applies and the calculation therefor. As used herein, "Business Day" shall mean any day on which the New York Stock Exchange (the "NYSE") and commercial banks in the city of New York are open for business. The Holder shall thereafter deliver to the Company the original Exercise Notice, the original Warrant and (unless a cashless exercise is intended) the Exercise Price. In the case of a dispute as to the calculation of the Exercise Price or the number of Warrant Shares issuable hereunder (including without limitation the calculation of any adjustment to the Exercise Price pursuant to Section 6 below), the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and shall submit the disputed calculations to the Company's independent accountant within two (2) Business Days following the Exercise Date. The Company shall cause such accountant to calculate the Exercise Price and/or the number of Warrant Shares issuable hereunder and to notify the Company and the Holder of the results in writing no later than two (2) Business Days following the day on which such accountant received the disputed calculations. Such accountant's calculation shall be deemed conclusive absent manifest error. The fees of any such accountant shall be borne by the party whose calculations were most at variance with those of such accountant. (c) Early Expiration. In the event that following the Effective Date of the Registration statement (as defined in the Registration Rights Agreement), the Closing Bid Price (as defined herein) of the Common Stock during any period of five (5) consecutive Trading Days (as defined in the Securities Purchase Agreement) is equal to or greater than $2.00 (subject to adjustment as provided herein) (the "First Expiration Trigger Event") or is equal to or greater than $3.00 (subject to adjustment as provided herein) (the "Second Expiration Trigger Event"), the Company may deliver to the Holder at any time that the Closing Bid Price equals or exceeds $2.00 in the case of the First Expiration Trigger Event or $3.00 in the case of the Second Expiration Trigger Event, written notice (the "Early Expiration Notice") that the Warrant shall expire for up to an aggregate of one-third (1/3 rd) of the Initial Shares for each of the First Expiration Trigger Event and Second Expiration Trigger Event. In the event that the Company delivers to the Holder an Early Expiration Notice in accordance with the foregoing, this Warrant shall expire with respect to the number of shares indicated in the Early Expiration Notice on the date (the "Early Expiration Date") which is thirty (30) Business Days following the Business Day on which such Early Expiration Notice is delivered to the Holder. The Company may give more than one Early Expiration Notice with respect to each of the First Expiration Trigger Event and Second Expiration Trigger Event so long as the aggregate number of shares subject to all such notices for each of the First and Second Expiration Trigger Events does not exceed one-third (1/3 rd) of the Initial Shares. The "Closing Bid Price" shall mean, with respect to the Common Stock, the Closing Bid Price for the Common Stock occurring on a given Trading Day on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg Financial Markets ("Bloomberg") or, if Bloomberg is not then reporting such prices, by a comparable reporting service of national reputation selected by the Company or if the foregoing does not apply, the last reported bid price of such security in the over- 2 the-counter market on the electronic bulletin board for such security as reported by Bloomberg or, if no bid price is reported for such security by Bloomberg, the average of the bid prices of all market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. (d) Cancellation of Warrant. This Warrant shall be canceled upon its exercise and, if this Warrant is exercised in part, the Company shall, at the time that it delivers Warrant Shares to the Holder pursuant to such exercise as provided herein, issue a new warrant, and deliver to the Holder a certificate representing such new warrant, with terms identical in all respects to this Warrant (except that such new warrant shall be exercisable into the number of shares of Common Stock with respect to which this Warrant shall remain unexercised); provided, however, that the Holder shall be entitled to exercise all or any portion of such new warrant at any time following the time at which this Warrant is exercised, regardless of whether the Company has actually issued such new warrant or delivered to the Holder a certificate therefor. 2. Delivery of Warrant Shares Upon Exercise. Upon receipt of an Exercise Notice pursuant to paragraph 1 above, the Company shall, (A) in the case of a Cashless Exercise (as defined below), no later than the close of business on the third (3rd) Business Day following the Exercise Date set forth in such Exercise Notice, (B) in the case of a Cash Exercise (as defined below) no later than the close of business on the later to occur of (i) the third (3rd) Business Day following the Exercise Date set forth in such Exercise Notice and (ii) such later date on which the Company shall have received payment of the Exercise Price, and (C) with respect to Warrant Shares which are disputed as described in paragraph 1(b) above, and required to be delivered by the Company pursuant to the accountant's calculations described therein, the close of business on the third (3rd) Business Day following the determination made pursuant to paragraph 1(b) (the "Delivery Date"), issue and deliver or caused to be delivered to the Holder the number of Warrant Shares as shall be determined as provided herein. The Company shall effect delivery of Warrant Shares to the Holder by, as long as the Company's designated transfer agent for the Common Stock (the "Transfer Agent") participates in the Depository Trust Company ("DTC") Fast Automated Securities Transfer program ("FAST"), crediting the account of the Holder or its nominee at DTC (as specified in the applicable Exercise Notice) with the number of Warrant Shares required to be delivered, no later than the close of business on such Delivery Date. In the event that the Transfer Agent is not a participant in FAST, or if Warrant Shares are not otherwise eligible for delivery through FAST, or if the Holder so specifies in an Exercise Notice or otherwise in writing on or before the Exercise Date, the Company shall effect delivery of Warrant Shares by delivering to the Holder or its nominee physical certificates representing such Warrant Shares, no later than the close of business on such Delivery Date. Warrant Shares delivered to the Holder shall not contain any restrictive legend as long as the resale of such Warrant Shares is covered by an effective Registration Statement (as defined in the Registration Rights Agreement) and such Holder represents in writing to the Company that such Warrant Shares (i) have been or are being sold pursuant to such registration statement or pursuant to Rule 144 under the 3 Securities Act of 1933, as amended, or (ii) may be made pursuant to Rule 144(k) under the Securities Act of 1933, as amended, or any successor rule or provision. 3. Failure to Deliver Warrant Shares. (a) Exercise Default. In the event that, as a result of any action or failure to act on the part of the Company (including without limitation a failure by the Company to have a sufficient number of shares of Common Stock authorized and reserved for issuance pursuant to exercise of the Warrants), the Company does not deliver to a Holder certificates representing the number of Warrant Shares specified in the applicable Exercise Notice on or before the Delivery Date therefor and such failure continues for ten (10) Business Days (an "Exercise Default"), the Company shall pay to the Holder payments ("Exercise Default Payments") in the amount of (i) (N/365) multiplied by (ii) the aggregate Exercise Price for the Warrant Shares which are the subject of such Exercise Default multiplied by (iii) the lower of twenty four percent (24%) and the maximum rate permitted by applicable law, where "N" equals the number of days elapsed between the original Delivery Date for such Warrant Shares and the date on which all of such Warrant Shares are issued and delivered to the Holder. Amounts payable under this subparagraph 3(a) shall be paid to the Holder in immediately available funds on or before the fifth (5th) Business Day of the calendar month immediately following the calendar month in which such amount has accrued. (b) Buy-in. Nothing herein shall limit a Holder's right to pursue actual damages for the Company's failure to issue and deliver Warrant Shares in connection with an exercise on the applicable Delivery Date (including, without limitation, damages relating to any purchase of shares of Common Stock by the Holder to make delivery on a sale effected in anticipation of receiving Warrant Shares upon exercise, such damages to be in an amount equal to (A) the aggregate amount paid by the Holder for the shares of Common Stock so purchased minus (B) the aggregate amount of net proceeds, if any, received by the Holder from the sale of the Warrant Shares issued by the Company pursuant to such exercise), and the Holder shall have the right to pursue all remedies available to it at law or in equity (including, without limitation, a decree of specific performance and/or injunctive relief). (c) Reduction of Exercise Price. In the event that, as a result of any action or failure to act on the part of the Company (including without limitation a failure by the Company to have a sufficient number of shares of Common Stock authorized and reserved for issuance pursuant to exercise of the Warrants), a Holder has not received certificates representing the Warrant Shares by the tenth (10th) Business Day following an Exercise Default, the Holder may, upon written notice to the Company, regain on such Business Day the rights of a Holder of this Warrant, or part thereof, with respect to the Warrant Shares that are the subject of such Exercise Default, and the Exercise Price for such Warrant Shares shall be reduced by one percent (1%) for each day beyond such 10th Business Day in which the Exercise Default continues. In such event, the Holder shall retain all of the Holder's rights and remedies with respect to the Company's failure to 4 deliver such Warrant Shares (including without limitation the right to receive the cash payments specified in subparagraph 3(a) above). (d) Holder of Record. Each Holder shall, for all purposes, be deemed to have become the holder of record of Warrant Shares on the Exercise Date of this Warrant, irrespective of the date of delivery of such Warrant Shares. Nothing in this Warrant shall be construed as conferring upon the Holder hereof any rights as a stockholder of the Company prior to the Exercise Date. 4. Exercise Limitations. Notwithstanding anything to the contrary contained herein, prior to the Nasdaq Notice (as defined in the Securities Purchase Agreement), this Warrant shall not be exercisable by the Holder to the extent (but only to the extent) that, if exercised by the Holder, the Holder, including all affiliates of the Holder, would be entitled to vote more than twenty percent (20%) of the Company's securities entitled to vote on matters to be voted on by the Company's stockholders. In this event, the Holder shall, in connection with any such exercise, grant to the Company's Board of Directors an irrevocable proxy to vote all shares of the Holder's Common Stock on any matter brought to the vote of the Company's stockholders in accordance with the decision of a majority of such directors, so long as, but only so long as and only to the extent that such shares, with all other shares of the Company's securities owned (not including for this purpose any warrants, options or convertible securities, so long as such securities do not have the right to vote on matters brought to a vote of the Company's stockholders) by the Holder, including all affiliates of the Holder, represent more than twenty percent (20%) of the Company's securities entitled to vote on matters to be voted on by the Company's stockholders. For clarification, it is expressly a term of this security that the limitations contained in this Section 4 shall apply to each successive Holder. The restriction contained in this Section 4 may not be altered, amended, deleted or changed in any manner whatsoever unless the holders of a majority of the outstanding shares of Common Stock approve such alteration, amendment, deletion or change. If at the time of the first meeting of the Company's stockholders following the First Closing (as defined in the Securities Purchase Agreement) the total number of shares of Common Stock beneficially owned by the Holder of this Warrant exceeds twenty percent (20%), the Company shall use it bests efforts to cause its stockholders to approve the removal of this restriction on the Holder's right to vote its shares of the Common Stock. If the Company is not able to obtain such approval by August 31, 2002, the Company shall pay the Holder $50,000 in consideration for its failure to obtain such approval. 5 5. Payment of the Exercise Price. The Holder may pay the Exercise Price in either of the following forms or, at the election of Holder, a combination thereof: (a) Cash Exercise: by delivery of immediately available funds. (b) Cashless Exercise: by surrender of this Warrant to the Company together with a notice of cashless exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows: Y x (A -- B) X = -------------------------- A where: X = the number of Warrant Shares to be issued to the Holder. Y = the number of Warrant Shares with respect to which this Warrant is being exercised. A = the average of the Closing Bid Prices of the Common Stock for the five (5) Trading Days immediately prior to (but not including) the Exercise Date. B = the Exercise Price; provided, however, that the Holder may exercise this Warrant pursuant to a Cashless Exercise only if, on the Exercise Date, the resale of Warrant Shares is not covered by an effective Registration Statement (as defined in the Registration Rights Agreement) that is available to the Holder on such date. For purposes of Rule 144 under the Securities Act of 1933, as amended, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have been commenced, on the Issue Date. 6. Anti-Dilution Adjustments; Distributions; Other Events. The Exercise Price and the number of Warrant Shares issuable hereunder shall be subject to adjustment from time to time as provided in this Section 6. In the event that any adjustment of the Exercise Price or number of Warrant Shares as required herein results in a fraction of a cent or fraction of a share, as applicable, such Exercise Price or number of Warrant Shares shall be rounded up or down to the nearest cent or share, as applicable. 6 (a) Adjustment of Exercise Price and Number of Shares upon Issuance of Common Stock. Except as otherwise provided in Section 6(c) hereof, if and whenever after the Issue Date, the Company issues or sells, or in accordance with Section 6(b) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration (other than a stock split or stock dividend) or for a consideration per share less than the Exercise Price (as then in effect)(other than issuances of Common Stock (i) pursuant to an employee stock purchase plan or upon the exercise of options issued under a stock option plan duly adopted by the Company, (ii) in connection with a merger, acquisition or strategic investment which, in any such case, is not effected for the primary purpose of raising equity capital, (iii) pursuant to securities outstanding on the Issue Date and issued pursuant to the terms of the Securities Purchase Agreement or (iv) in connection with a firm-commitment underwritten secondary offering) (a "Dilutive Issuance"), then effective immediately upon the Dilutive Issuance, the Exercise Price will be adjusted in accordance with the following formula: E' = (E)(O+P/E) ---------- (CSDO) where: E' = the adjusted Exercise Price; E = the then current Exercise Price; O = the number of shares of Common Stock outstanding immediately prior to the Dilutive Issuance; P = the aggregate consideration, calculated as set forth in Section 6(b) hereof, received by the Company upon such Dilutive Issuance; and CSDO = the total number of shares of Common Stock Deemed Outstanding (as herein defined) immediately after the Dilutive Issuance. (b) Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 6(a) hereof, the following will apply: (i) Issuance of Rights or Options. If, after the date hereof, the Company in any manner issues or grants any warrants, rights or options, whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities exercisable, convertible into or exchangeable for Common Stock ("Convertible Securities")(such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options"), and the price per share for which Common Stock is purchasable or issuable upon the exercise of such Options is less than the Exercise Price (as then in effect) on the date of issuance of such Option or direct stock grant ("Below Market Options"), then the maximum total number of shares of Common Stock issuable upon the exercise of all such Below Market Options (assuming full exercise, conversion or exchange of Convertible Securities, if applicable) will, as of the date of the 7 issuance or grant of such Below Market Options, be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of the preceding sentence, the price per share for which Common Stock is issuable upon the exercise of such Below Market Options is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Below Market Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of all such Below Market Options, plus, in the case of Convertible Securities issuable upon the exercise of such Below Market Options, the minimum aggregate amount of additional consideration payable upon the exercise, conversion or exchange thereof at the time such Convertible Securities first become exercisable, convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Below Market Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Exercise Price will be made upon the exercise of such Below Market Options or upon the exercise, conversion or exchange of Convertible Securities issuable upon exercise of such Below Market Options. (ii) Issuance of Convertible Securities. (A) If the Company in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options) and the price per share for which Common Stock is issuable upon such exercise, conversion or exchange (as determined pursuant to Section 6(b)(ii)(B) if applicable) is less than the Exercise Price (as then in effect) on the date of issuance of such Convertible Security, then the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities will, as of the date of the issuance of such Convertible Securities, be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of the preceding sentence, the price per share for which Common Stock is issuable upon such exercise, conversion or exchange is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange thereof at the time such Convertible Securities first become exercisable, convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities. No further adjustment to the Exercise Price will be made upon the actual issuances of such Common Stock upon exercise, conversion or exchange of such Convertible Securities. (B) If the Company in any manner issues or sells any Convertible Securities with a fluctuating or re-setting conversion or exercise price or exchange ratio (a "Variable Rate Convertible Security"), then the price per share for which Common Stock is issuable upon such exercise, conversion or exchange for purposes of the calculation contemplated by Section 6(b)(ii)(A) shall be deemed to be the lowest price per share which would be applicable assuming that (1) all holding period and other conditions to any discounts contained in such Convertible Security have been satisfied, and (2) the 8 conversion or exercise price on the date of exercise, conversion or exchange of such Convertible Security was 80% of the Closing Bid Price on the date of issuance of such Convertible Security (the "Assumed Variable Market Price"). (iii) Change in Option Price or Conversion Rate. If there is a change at any time in (i) the amount of additional consideration payable to the Company upon the exercise of any Options; (ii) the amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange of any Convertible Securities; or (iii) the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock (other than under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at such time shall be adjusted to the Exercise Price which would have been in effect had such Options or Convertible Securities still outstanding provided for such changed additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. (iv) Treatment of Expired Options and Unexercised Convertible Securities. If, in any case, the total number of shares of Common Stock issuable upon exercise of any Options or upon exercise, conversion or exchange of any Convertible Securities is not, in fact, issued and the rights to exercise such Option or to exercise, convert or exchange such Convertible Securities shall have expired or terminated, the Exercise Price then in effect will be readjusted to the Exercise Price which would have been in effect at the time of such expiration or termination had such Options or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination (other than in respect of the actual number of shares of Common Stock issued upon exercise or conversion thereof), never been issued. (v) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued, granted or sold for cash, the consideration received therefor for purposes of this Warrant will be the amount received by the Company therefor, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance, grant or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received by the Company will be the fair market value of such consideration except where such consideration consists of freely-tradable securities, in which case the amount of consideration received by the Company will be the Market Price thereof as of the date of receipt. The fair market value of any consideration other than cash or securities will be determined in the good faith reasonable business judgment of the Board of Directors. 9 (vi) Exceptions to Adjustment of Exercise Price. No adjustment to the Exercise Price will be made (i) upon the exercise or conversion of any warrants, options or convertible securities issued and outstanding on the date hereof in accordance with the terms of such securities as of such date; (ii) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any employee, consultant or director benefit plan of the Company now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose; or (iii) upon the issuance of any additional Common Stock pursuant to Section 4.12 of the Securities Purchase Agreement or the exercise of the Warrants. (c) Subdivision or Combination of Common Stock. If the Company, at any time after the initial issuance of this Warrant, subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) its shares of Common Stock into a greater number of shares, then after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company, at any time after the initial issuance of this Warrant, combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) its shares of Common Stock into a smaller number of shares, then, after the date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionally increased. In the event of any adjustment to the Exercise Price arising from an event specified in this paragraph (c), the number of shares of Common Stock into which this Warrant is exercisable will be proportionately increased or reduced, as the case may be. (d) Distributions. If the Company or any of its subsidiaries shall at any time distribute to holders of Common Stock (or to a holder, other than the Company, of the common stock of any such subsidiary) cash, evidences of indebtedness or other securities or assets (other than cash dividends or distributions payable out of earned surplus or net profits for the current or the immediately preceding year) including any dividend or distribution in shares of capital stock of a subsidiary of the Company (collectively, a "Distribution") then, in any such case, the Holder of this Warrant shall be entitled to receive at the time of the exercise of the Warrant, an amount and type of such Distribution as though such Holder were a holder on the record date therefor of a number of shares of Common Stock into which this Warrant is exercisable as of such record date (such number of shares to be determined at the Exercise Price then in effect and without regard to any limitation on exercise of this Warrant that may exist pursuant to the terms hereof or otherwise). (e) Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant to this Section 6, the Holder of this Warrant shall, upon exercise of this Warrant, become entitled to receive securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject 10 to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 6. (f) Special Adjustment and Notice of Adjustment. Upon the occurrence of any event which requires any adjustment of the Exercise Price, then, and in each such case, the Company shall give notice thereof to the Holder, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease in the number of Warrant Shares purchasable at such price upon exercise, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the chief financial officer of the Company. If the Company takes any actions (including under or by virtue of this Section 6) which would have a dilutive effect on the Holder or which would materially and adversely affect the Holder with respect to its investment in the Warrant, and if the provisions of this Section 6, are not strictly applicable to such actions or, if applicable to such actions, would not operate to equitably protect the Holder against such actions, then the Company shall promptly upon notice from Holder appoint its independent certified public accountants to determine as promptly as practicable an appropriate adjustment to the terms hereof, including without limitation adjustments to the Exercise Price, or another appropriate action to so equitably protect such Holder and prevent any such dilution and any such material adverse effect, as the case may be. Following such determination, the Company shall forthwith make the adjustments or take the other actions described therein. (g) Other Notices. In case at any time: (i) the Company shall declare any dividend upon the Common Stock payable in shares of stock of any class or make any other distribution to the holders of the Common Stock; (ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class or other rights; (iii) there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company with or into, or sale of all or substantially all of its assets to, another corporation or entity; or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; then, in each such case, the Company shall give to the Holder (a) notice of the date on which the books of the Company shall close or a record shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable approximation thereof by the Company) 11 when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be given at least thirty (30) days prior to the record date or the date on which the Company's books are closed in respect thereto, but in no event earlier than public announcement of such proposed transaction or event. Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above. 7. Fractional Interests. No fractional shares or scrip representing fractional shares shall be issuable upon the exercise of this Warrant, but on exercise of this Warrant, the Holder hereof may purchase only a whole number of shares of Common Stock. If, on exercise of this Warrant, the Holder hereof would be entitled to a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon exercise shall be rounded up or down to the nearest whole number of shares of Common Stock. 8. Transfer of this Warrant. The Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in part, as long as such sale or other disposition is made pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act of 1933, as amended, and applicable state laws. Upon such transfer or other disposition, the Holder shall deliver a written notice to Company, substantially in the form of the Transfer Notice attached hereto as Exhibit B (the "Transfer Notice"), indicating the person or persons to whom this Warrant shall be transferred and, if less than all of this Warrant is transferred or this Warrant is transferred in parts, the number of Warrant Shares to be covered by the part of this Warrant to be transferred to each such person. Within three (3) Business Days of receiving a Transfer Notice and the original of this Warrant, the Company shall deliver to the each transferee designated by the Holder a Warrant or Warrants of like tenor and terms for the appropriate number of Warrant Shares. Notwithstanding the foregoing, no Holder may knowingly and voluntarily sell this Warrant (or any portion thereof) to an entity that is a competitor of the Company. 9. Benefits of this Warrant. Nothing in this Warrant shall be construed to confer upon any person other than the Holder of this Warrant any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of the Holder of this Warrant. 12 10. Loss, theft, destruction or mutilation of Warrant. Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. 11. Notice or Demands. Except as otherwise provided herein, any notice, demand or request required or permitted to be given pursuant to the terms of this Warrant shall be in writing and shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original to follow) on or before 5:00 p.m., mountain time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows: If to the Company: WEBB Interactive Services, Inc. 1899 Wynkoop, Suite 600 Denver, Colorado 80202 Telecopy: (303)295-3584 Attention: William R. Cullen with a copy to: Gray, Plant, Mooty, Mooty & Bennett, P.A. 3400 City Center 33 South Sixth Street Minneapolis, MN 55402-3796 Telecopy: (612) 333-0066 Attention: Lindley S. Branson, Esq. and if to the Holder, to such address as shall be designated by the Holder in writing to the Company. 13 12. Applicable Law. This Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the State of Colorado, without giving effect to conflict of law provisions thereof. IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 17th day of January, 2002. WEBB INTERACTIVE SERVICES, INC. By: /s/ Lindley S. Branson ----------------------------------------- Name: Lindley S. Branson Title: Vice President and General Counsel 14 EX-3 5 dex3.txt REGISTRATION RIGHTS AGREEMENT Exhibit 3 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of January 17, 2002, by and among WEBB INTERACTIVE SERVICES, INC., a Delaware corporation (the "Company"), and JONA, INC. (the "Purchaser"). The Company has agreed, on the terms and subject to the conditions set forth in the Securities Purchase Agreement of even date herewith (the "Securities Purchase Agreement"), to issue and sell to the Purchaser shares of the Company's Common Stock, no par value (the "Common Stock") and a related warrant (the "Warrant"). The Warrants entitle the holder thereof to purchase shares (the "Warrant Shares") of the Company's Common Stock. In order to induce the Purchaser to enter into the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the "Securities Act"), and under applicable state securities laws. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Securities Purchase Agreement, including the exhibits thereto. In consideration of the Purchaser entering into the Securities Purchase Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings specified: (a) "Business Day" shall have the meaning specified in the Securities Purchase Agreement; (b) "Holder" means any person owning or having the right to acquire through exercise of the Warrants, Registrable Securities, including initially the Purchaser and thereafter any permitted assignee thereof; (c) "Effective Date" means the date on which the Registration Statement is declared effective by the Securities and Exchange Commission (the "Commission"). (d) "Filing Deadline" means May 1, 2002; (e) "Register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement or statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act ("Rule 415") or any successor rule providing for the offering of securities on a continuous or delayed basis ("Registration Statement"), and the declaration or ordering of effectiveness of the Registration Statement by the Commission; and (f) "Registerable Securities" means the Common Stock issued in accordance with the term of the Securities Purchase Agreement and the Warrant Shares and any shares of capital stock issued or issuable from time to time (with any adjustments) in replacement of, in exchange for or otherwise in respect of the Common Stock and the Warrant Shares. 2. MANDATORY REGISTRATION. (a) On or before the Filing Deadline, the Company shall prepare and file with the Commission a Registration Statement on Form S-3 as a "shelf" registration statement under Rule 415 covering the resale of up to 7,500,000 shares of Common Stock issued pursuant to the Securities Purchase Agreement and up to 7,500,000 Warrant Shares. The Registration Statement shall state, to the extent permitted by Rule 416 under the Securities Act, that it also covers such indeterminate number of shares of Common Stock as may be required to effect exercise of the Warrants in order to prevent dilution resulting from stock splits, stock dividends or similar events. (b) The Company shall use its best efforts to cause the Registration Statement to become effective as soon as practicable following the filing thereof, but in no event prior to June 5, 2002. The Company shall respond promptly to any and all comments made by the staff of the Commission on the Registration Statement (but in no event later than fifteen (15) Business Days following the Company's receipt thereof), and shall submit to the Commission, within three (3) Business Days after the Company learns that no review of the Registration Statement will be made by the staff of the Commission or that the staff of the Commission has no further comments on the Registration Statement, as the case may be, a request for acceleration of the effectiveness of the Registration Statement to a time and date not later than forty eight (48) hours after the submission of such request. The Company shall maintain the effectiveness of the Registration Statement until the earlier to occur of (i) the date on which all of the Registrable Securities have been sold pursuant to the Registration Statement and (ii) the date on which all of the remaining Registrable Securities (in the reasonable opinion of counsel to the Holders) may be immediately sold to the public without registration and without regard to the amount of Registrable Securities which may be sold by a Holder thereof at a given time. (c) If for any reason from time to time there are Registrable Securities which are not included or which are not allowed to be included by the Commission in a Registration Statement filed pursuant hereto, the Company shall file additional Registration Statements as soon as practicable following a request by any Holder to effect a 2 registration of all of such Registrable Securities, which Registration Statement shall be subject to all terms of this Agreement and shall use its best efforts to cause such Registration Statement to become effective as soon as practicable after such filing. The Company shall maintain the effectiveness of each Registration Statement until the earlier to occur of (i) the date on which all of the Registrable Securities have been sold pursuant to the Registration Statement and (ii) the date on which all of the remaining Registrable Securities (in the reasonable opinion of counsel to the Holders) may be immediately sold to the public without registration and without regard to the amount of Registrable Securities which may be sold by a Holder thereof at a given time. 3. PIGGYBACK REGISTRATION If at any time prior to the expiration of the Registration Period, (i) the Company proposes to register shares of Common Stock under the Securities Act in connection with the public offering of such shares for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan or employee stock award or a registration on Form S-4 under the Securities Act or any successor or similar form registering stock issuable upon a reclassification, a business combination involving an exchange of securities or an exchange offer for securities of the issuer or another entity, or a registration statement on Form S-3 covering the resale of securities issued in connection with a corporate acquisition) (a "Proposed Registration") and (ii) a registration statement covering the sale of all of the Registrable Securities is not then effective and available for sales thereof by the Holders, the Company shall, at such time, promptly give each Holder written notice of such Proposed Registration. Each Holder shall have twenty (20) days from its receipt of such notice to deliver to the Company a written request specifying the amount of Registrable Securities that such Holder intends to sell and such Holder's intended method of distribution. Upon receipt of such request, the Company shall use its best efforts to cause all Registrable Securities which the Company has been requested to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of such Holder; provided, however, that the Company shall have the right to postpone or withdraw any registration effected pursuant to this Section 3 without obligation to the Holder. If, in connection with any underwritten public offering for the account of the Company or for shareholders of the Company that have contractual rights to require the Company to register shares of Common Stock, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in the judgment of such underwriter(s), marketing or other factors dictate such limitation is necessary to facilitate such offering, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which each Holder has requested inclusion hereunder as such underwriter(s) shall permit. Any such exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in the Registration Statement, in proportion to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of 3 which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities; and provided, further, that, after giving effect to the immediately preceding proviso, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the right to include such securities in the Registration Statement. 4. OBLIGATIONS OF THE COMPANY In addition to performing its obligations hereunder, including without limitation those pursuant to paragraphs 2(a), 2(b) and 2(c) above, the Company shall: (a) promptly prepare and file with the Commission such amendments and supplements to each Registration Statement and each prospectus used in connection with the Registration Statement as may be necessary (i) to comply with the provisions of the Securities Act or (ii) to maintain the effectiveness of each Registration Statement during the applicable Registration Period, or as may be reasonably requested within a reasonable time prior to any proposed sale by a Holder in order to incorporate information concerning such Holder or such Holder's intended method of distribution. The Company shall cause such amendments and supplements to become effective as soon as practicable following the filing thereof. (b) secure the listing of all Registrable Securities on the Nasdaq Stock Market prior to the date on which the Registration Statement relating to such Registrable Securities becomes effective; (c) furnish to each Holder such number of copies of the prospectus included in such Registration Statement, including a preliminary prospectus, if any, in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request in order to facilitate the disposition of such Holder's Registrable Securities; (d) use all commercially reasonable efforts to register or qualify the Registrable Securities under the securities or "blue sky" laws of such jurisdictions within the United States as shall be reasonably requested from time to time by a Holder, and do any and all other acts or things which may be necessary or advisable to enable such Holder to consummate the public sale or other disposition of the Registrable Securities in such jurisdictions; 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 jurisdiction; (e) in the event of an underwritten public offering of the Registrable Securities, enter into (together with all Holders proposing to distribute Registrable Securities through such underwriting) and perform its obligations under an underwriting agreement, in usual and customary form reasonably acceptable to the Company, with the managing underwriter of such offering; 4 (f) notify each Holder immediately upon the occurrence of any event as a result of which the prospectus included in such Registration Statement, as then in effect, contains an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and as promptly as practicable, prepare, file and furnish to each Holder a reasonable number of copies of a supplement or an amendment to such prospectus as may be necessary so that such prospectus does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (g) use all commercially reasonable efforts to prevent the issuance of any stop order or other order suspending the effectiveness of such Registration Statement and, if such an order is issued, to obtain the withdrawal thereof at the earliest possible time and to notify each Holder of the issuance of such order and the resolution thereof; (h) furnish to each Holder, on the date that such Registration Statement becomes effective, (x) a letter, dated such date, of outside counsel representing the Company (and reasonably acceptable to such Holder) addressed to such Holder, confirming the effectiveness of the Registration Statement and, to the knowledge of such counsel, the absence of any stop order, and (y) in the case of an underwriting, (A) an opinion addressed to the underwriters, dated such date, of such outside counsel, in such form and substance as is required to be given to such underwriters, and (B) a letter addressed to such underwriters, dated such date, from the Company's independent certified public accountants, in such form and substance as is required to be given by the Company's independent certified public accountants to such underwriters; (i) provide each Holder and its representatives the opportunity to conduct a reasonable inquiry of the Company's financial and other records during normal business hours and make available its officers, directors and employees for questions regarding information which such Holder may reasonably request in order to fulfill any due diligence obligation on its part; and (j) permit counsel retained for such purpose by each Holder to review the Registration Statement and all amendments and supplements thereto, and any comments made by the staff of the Commission and the Company's responses thereto, within a reasonable period of time prior to the filing thereof with the Commission (or, in the case of comments made by the staff of the Commission, within a reasonable period of time following the receipt thereof by the Company) and amend such materials in accordance with the comments of such counsel. 5. OBLIGATIONS OF EACH HOLDER In connection with the registration of the Registrable Securities pursuant to the Registration Statement, each Holder shall: 5 (a) furnish to the Company in writing such information regarding itself and the intended method of disposition of Registrable Securities as the Company shall reasonably request in order to effect the registration thereof; (b) upon receipt of any notice from the Company of the happening of any event of the kind described in paragraphs 4(f) or 4(g), immediately discontinue any sale or other disposition of Registrable Securities pursuant to the Registration Statement until the filing of an amendment or supplement as described in paragraph 4(f) or withdrawal of the stop order referred to in paragraph 4(g); (c) in the event of an underwritten offering of the Registrable Securities, enter into a customary and reasonable underwriting agreement and execute such other documents as the managing underwriter for such offering may reasonably request; (d) to the extent required by applicable law, deliver a prospectus to the purchaser of Registrable Securities; (e) notify the Company when it has sold all of the Registrable Securities theretofore held by it; and (f) promptly notify the Company in the event that any information supplied by such Holder in writing for inclusion in the Registration Statement or related prospectus is untrue or omits to state a material fact required to be stated therein or necessary to make such information not misleading in light of the circumstances then existing. 6. INDEMNIFICATION. In the event that any Registrable Securities are included in a Registration Statement under this Agreement: (a) To the extent permitted by law, the Company shall indemnify and hold harmless each Holder, the officers, directors, employees and agents of such Holder, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims, damages, liabilities or reasonable out-of-pocket expenses (whether joint or several) (collectively, including legal or other expenses reasonably incurred in connection with investigating or defending same, "Losses"), insofar as any such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus, if any, or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Subject to the provisions of paragraph 6(c) below, the Company will reimburse such Holder, and each such officer, director, employee, agent or 6 controlling person for any legal or other expenses as reasonably incurred by any such entity or person in connection with investigating or defending any Loss; provided, however, that the foregoing indemnity shall not apply to amounts paid in settlement of any Loss if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be obligated to indemnify any person for any Loss to the extent that such Loss arises out of or is based upon and in conformity with written information furnished by such person expressly for use in such Registration Statement; and provided, further, that the Company shall not be required to indemnify any person to the extent that any Loss results from such person selling Registrable Securities (i) to a person to whom there was not sent or given, at or prior to the written confirmation of the sale of such shares, a copy of the prospectus, as most recently amended or supplemented, if the Company has previously furnished or made available copies thereof or (ii) during any period following written notice by the Company to such Holder of an event described in paragraph 4(f) or 4(g). (b) To the extent permitted by law, each Holder, acting severally and not jointly, shall indemnify and hold harmless the Company, the officers, directors, employees, agents and representatives of the Company, and each person, if any, who controls the Company within the meaning of the Securities Act or the 1934 Act, against any Losses to the extent (and only to the extent) that any such Losses arise out of or are based upon and in conformity with written information furnished by such Holder expressly for use in such Registration Statement; and such Holder will reimburse any legal or other expenses as reasonably incurred by the Company and any such officer, director, employee, agent, representative, or controlling person, in connection with investigating or defending any such Loss; provided, however, that the foregoing indemnity shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of such Holder, which consent shall not be unreasonably withheld; provided, that, in no event shall any indemnity under this paragraph 6(b) exceed the net proceeds resulting from the sale of the Registrable Securities sold by such Holder under the Registration Statement. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate under applicable standards of professional conduct due to actual or potential conflicting interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, to the extent prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party 7 under this Section 6 with respect to such action, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 6 or with respect to any other action unless the indemnifying party is materially prejudiced as a result of not receiving such notice. (d) In the event that the indemnity provided in paragraph 6(a) or 6(b) is unavailable or insufficient to hold harmless an indemnified party for any reason, the Company and each Holder agree, severally and not jointly, to contribute to the aggregate Losses to which the Company or such Holder may be subject in such proportion as is appropriate to reflect the relative fault of the Company and such Holder in connection with the statements or omissions which resulted in such Losses; provided, however, that in no case shall such Holder be responsible for any amount in excess of the proceeds resulting from the sale of the Registrable Securities sold by it under the Registration Statement. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or by such Holder. The Company and each Holder agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph 6(d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to indemnification or contribution from any person who is not guilty of fraudulent misrepresentation. For purposes of this Section 6, each person who controls a Holder within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee or agent of such Holder shall have the same rights to contribution as such Holder, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee or agent of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph 6(d). (e) The obligations of the Company and each Holder under this Section 6 shall survive the conversion of the Preferred Stock and exercise of the Warrants in full, the completion of any offering of Registrable Securities pursuant to a Registration Statement under this Agreement, or otherwise. 7. REPORTS. With a view to making available to each Holder the benefits of Rule 144 under the Securities Act ("Rule 144") and any other similar rule or regulation of the Commission that may at any time permit such Holder to sell securities of the Company to the public without registration, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; 8 (b) file with the Commission in a timely manner all reports and other documents required to be filed by the Company under the Securities Act and the 1934 Act; and (c) furnish to such Holder, so long as such Holder owns any Registrable Securities, forthwith upon written request (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, and the 1934 Act, (ii) to the extent not publicly available through the Commission's EDGAR database, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing such Holder of any rule or regulation of the Commission which permits the selling of any such securities without registration. 9 8. MISCELLANEOUS. (a) Expenses of Registration. All expenses, other than underwriting discounts and commissions and fees and expenses of one counsel to the Holders, incurred in connection with the registrations, filings or qualifications described herein, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, the fees and disbursements of counsel for the Company, and the fees and disbursements incurred in connection with the opinion and letter described in paragraph 4(h) hereof, shall be borne by the Company. (b) Amendment; Waiver. Any provision of this Agreement may be amended only pursuant to a written instrument executed by the Company and each Holder. Any waiver of the provisions of this Agreement may be made only pursuant to a written instrument executed by the party against whom enforcement is sought. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder, each future Holder, and the Company. The failure of any party to exercise any right or remedy under this Agreement or otherwise, or the delay by any party in exercising such right or remedy, shall not operate as a waiver thereof. (c) Notices. Any notice, demand or request required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing and shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original to follow) on or before 5:00 p.m., mountain time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the day actually received after deposit in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed to the parties as follows: If to the Company: WEBB Interactive Services, Inc. 1899 Wynkoop, Suite 600 Denver, Colorado 80202 Telecopy: (303)295-3584 Attention: William R. Cullen with a copy to: Gray, Plant, Mooty, Mooty & Bennett, P.A. 3400 City Center 33 South Sixth Street Minneapolis, MN 55402-3796 Telecopy: (612) 333-0066 Attention: Lindley S. Branson, Esq. 10 and if to any Holder, to such address as shall be designated by such Holder in writing to the Company. (d) Termination. This Agreement shall terminate on the earlier to occur of (a) the end of the Registration Period and (b) the date on which all of the Registrable Securities have been publicly distributed; but any such termination shall be without prejudice to (i) the parties' rights and obligations arising from breaches of this Agreement occurring prior to such termination and (ii) the indemnification and contribution obligations under this Agreement. (e) Assignment. Upon the transfer of Common Stock, the Warrant or Registrable Securities by a Holder, the rights of such Holder hereunder with respect to the securities so transferred shall be assigned automatically to the transferee thereof as long as: (i) the Company is, within a reasonable period of time following such transfer, furnished with written notice of the name and address of such transferee, (ii) the transferee agrees in writing with the Company to be bound by all of the provisions hereof and (iii) such transfer is made in accordance with the applicable requirements of the Securities Purchase Agreement or the Warrant, as the case may be; provided, however, that the registration rights granted in this Agreement shall not be transferred to any person or entity that receives any such security pursuant to an effective registration statement under the Securities Act or pursuant to a transaction under Rule 144 or any successor provision thereto. (f) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed one and the same instrument. This Agreement, once executed by a party, may be delivered to any other party hereto by facsimile transmission. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado without regard to the conflict of laws provisions thereof. * * * * * 11 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first-above written. WEBB INTERACTIVE SERVICES, INC. By: /s/ Lindley S. Branson ----------------------------------- Name: Lindley S. Branson Title: Vice President and General Counsel JONA, INC. By: /s/ Neil A. McMurry ---------------------------------- Name: Neil A. McMurry Its: President 12 EX-4 6 dex4.txt PLEDGE & SECURITY AGREEMENT Exhibit 4 PLEDGE AND SECURITY AGREEMENT This PLEDGE AND SECURITY AGREEMENT (the "Agreement"), dated as of January 17, 2002, is by and between Webb Interactive Services, Inc., a corporation organized and existing under the laws of Colorado (the "Pledgor") and JONA, INC., whose offices are in the State of Wyoming (the "Pledgee"). Recitals WHEREAS, the Pledgor has given a promissory note to Pledgee, of even date herewith (the "Note"); WHEREAS, as a condition to the consummation of the transactions contemplated by the Note, the Pledgor has agreed to secure its obligations under the Note by entering into this Agreement. Agreement NOW, THEREFORE, the Pledgor and the Pledgee hereby agree as follows: 1. Pledge and Grant of Security Interest. (a) For value received and to induce the Pledgee to extend a loan to the Pledgor, the Pledgor hereby pledges and assigns to the Pledgee and grants as security to the Pledgee for all present and future obligations, indebtedness and liabilities of all kinds of Pledgor to the Pledgee under the Note (the "Secured Obligations"), a first lien on, and security interest in, all its right, title and interest in and to the following: i. 3,600,000 shares of the Series C Convertible Preferred Stock of Jabber, Inc., a Delaware corporation (the "Pledged Subsidiary"), which are presently owned by the Pledgor (and all additional shares acquired by the Pledgor by stock dividend, stock split, distribution or otherwise with respect to the 3,600,000 shares of Series C Convertible Preferred Stock (all such shares of stock of the Pledged Subsidiary pledged hereunder being referred to collectively as the "Pledged Shares"); ii. all certificates representing any of the Pledged Shares, whether currently existing or hereafter issued; and iii. except as otherwise provided in Section 5 hereof, any and all dividends, cash, securities, instruments, warrants, options and other property, proceeds and distributions from time to time received, receivable, paid or otherwise distributed in respect of, in substitution for, in addition to or in exchange for or evidencing any of the Pledged Shares and all proceeds thereof. (b) The Pledged Shares, the certificates therefor, all dividends, cash, securities, instruments, warrants, options and other property, proceeds and distributions from time to time received, receivable, paid or otherwise distributed in respect of, in substitution for, in addition to or in exchange for or evidencing any of the Pledged Shares and all proceeds thereof together with all other property, rights and interests described in this Section 1, whether now existing or hereafter acquired or obtained, are referred to herein collectively as the "Collateral." 2. Delivery of Pledged Share Certificates; Registry Notations. (a) All certificates or instruments representing or evidencing the Pledged Shares referred to in Section 1 hereof have previously been delivered or are being delivered to the Pledgee concurrently with the execution of this Agreement, and are in suitable form for transfer by delivery, endorsed in blank or accompanied by duly executed undated instruments of transfer or assignments in blank, having attached thereto or to such certificates all requisite federal, state or provincial stock transfer tax stamps, all in form and substance satisfactory to the Pledgee. (b) All necessary and appropriate entries, notations and written descriptions in the books or share registry of the Pledged Subsidiary evidencing and necessary or desirable to perfect the pledge of the Collateral pursuant hereto have been or will be made concurrently with the execution of this Agreement, and the Pledgor shall pay all requisite federal, state, provincial or other governmental fees or taxes therefor. The Pledgor shall forthwith take all other actions necessary, appropriate or desirable pursuant to applicable law to perfect the pledge of the Collateral. 3. Representations, Warranties, Covenants and Agreements of the Pledgor. The Pledgor represents, warrants, covenants and agrees that: (a) The Pledged Shares have been duly authorized and are validly issued, fully paid and non-assessable. -2- (b) Except for the security interests granted hereby, the Pledgor is, and as to Collateral acquired after the date hereof the Pledgor shall and will be at the time of acquisition, the record and beneficial owner and holder of the Collateral free from any adverse claim, security interest, pledge, encumbrance, lien, charge, or other right, title or interest of any person other than the Pledgee, and covenants that at all times the Collateral will be and remain free of all such adverse claims, security interests, pledges, encumbrances, liens, charges or other adverse interests by third parties. The Pledged Shares are free from and not otherwise subject to any voting agreements, voting trusts, proxies, options, preferential purchase rights or other right of any party to acquire all or any portion of the Pledged Shares. (c) (i) The Pledgor has full power and lawful authority to enter into this Agreement and to pledge the Collateral to the Pledgee and to grant to the Pledgee a first and prior security interest therein as herein provided, all of which have been duly authorized by all necessary corporate action. (ii) The execution and delivery and the performance hereof are not in contravention of any charter, articles of incorporation or by-law provision, or of any Instrument or undertaking to which the Pledgor is a party or by which the Pledgor or its property is bound. (iii) This Agreement constitutes the valid and legally binding obligation of the Pledgor enforceable in accordance with its terms. (iv) The Pledgor will defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein. Any officer or representative acting for or on behalf of the Pledgor in connection with this Agreement or any aspect hereof, or entering into or executing this Agreement on behalf of the Pledgor, has been duly authorized to do so, and is fully empowered to act for and represent the Pledgor in connection with this Agreement and all matters related thereto or in connection therewith. (d) (i) Pledgor's principal place of business and chief executive office is in Denver, Colorado. Pledgor shall not change the location of its principal place of business or chief executive office without twenty (20) days prior written notice to the Pledgee. (ii) The preamble hereof states the correct legal name of the Pledgor and the Pledgor does not conduct business under any other name. Pledgor shall not change its corporate name, nor do business under any name other than its current name, unless the Pledgor has delivered to the Pledgee written notice of such other names at least 30 days prior to the date of first use thereof by the Pledgor. -3- (e) (i) The Pledgor has not heretofore agreed to or signed any pledge, charge, financing statement or security agreement which covers any of the Collateral, and no such pledge, charge, financing statement or security agreement is now on file in any public office and the Pledgor has not heretofore filed or inserted any entries or notations in the books or share registry of the Pledgor or the Pledgor evidencing any pledge of the Collateral (other than such financing statements, security agreements and share registry notations, if any, of which both written notice and true and correct copies have heretofore been given by the Pledgor to the Pledgee). (ii) As long as any amount remains unpaid on any of the Secured Obligations or under any agreement entered into in connection with the Secured Obligations, except as expressly permitted by any such agreement, (A) the Pledgor will not enter into or execute any pledge, charge, security agreement or financing statement covering the Collateral, other than those pledges, charges, security agreements and financing statements in favor of the Pledgee hereunder, (B) the Pledgor shall not file or consent to the filing of any pledge, financing statement or statements (or any documents or papers filed as such) covering the Collateral, other than financing statements in favor of the Pledgee hereunder, unless in any case the prior written consent of the Pledgee shall have been obtained, and further (C) the Pledgor shall not insert, file or make any notations in the books or share registry of the Pledgor evidencing any pledge of the Collateral, other than such entries and notations in favor of the Pledgee hereunder. (iii) The Pledgor authorizes the Pledgee to file, in its discretion, in jurisdictions where this authorization will be given effect, a financing statement, personal property security act filing or other instrument for filing required by any jurisdiction applicable to the Collateral signed only by the Pledgee covering the Collateral, and hereby appoints the Pledgee as the Pledgor's attorney-in-fact to sign and file any such financing statements or other instruments covering the Collateral. At the request of the Pledgee, the Pledgor will join the Pledgee in executing such Instruments as the Pledgee may determine from time to time to be necessary or desirable under provisions of any applicable Uniform Commercial Code, Personal Property Security Act or other applicable laws in effect where the Collateral is located or where the Pledgor conducts business; without limiting the generality of the foregoing, the Pledgor agrees to join the Pledgee, at the Pledgee's request, in executing one or more financing statements or other Instruments in form satisfactory to the Pledgee, and the Pledgor will pay the costs of filing or recording the same in all public offices at any time and from time to time whenever filing or recording of any such financing statement or other Instrument is deemed by the Pledgee to be necessary or desirable. -4- 4. Rights of the Pledgee and the Pledgor Related to Collateral. The Pledgee may from time to time following the occurrence of an Event of Default, as defined in the Note or the Purchase Agreement: (a) Transfer any of the Collateral into the name of the Pledgee or its nominee. (b) Notify parties obligated on any of the Collateral to make payment to the Pledgee of any amounts due or to become due thereunder. (c) Subject to compliance with federal and state securities laws, enforce collection of any of the Collateral by suit or otherwise; surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligation of any nature of any party with respect thereto; and exercise all other rights of the Pledgor in any of the Collateral, except as hereinafter provided with respect to income from or interest on the Collateral and except that, prior to an Event of Default, the Pledgor may exercise its voting and consensual rights with respect to any Collateral constituting voting securities. (d) Take possession or control of any proceeds of the Collateral. Until the occurrence of an Event of Default, the Pledgor shall have the right to receive all income from or interest on the Collateral, and if the Pledgee receives any such income or interest prior to the occurrence of an Event of Default, the Pledgee shall pay the same promptly to the Pledgor, except that in the case of securities or other property distributed by way of a dividend or otherwise with respect to the Collateral, such securities or other property shall be promptly delivered to the Pledgee to be held as Pledged Shares or other Collateral hereunder. Upon the occurrence of an Event of Default, the Pledgor will not demand or receive any income from or interest on the Collateral, and if the Pledgor receives any such income or interest without any demand by it, the same shall be held by the Pledgor in trust for the Pledgee in the same medium in which received, shall not be commingled with any assets of the Pledgor and shall be delivered to the Pledgee in the form received, properly endorsed to permit collection, not later than the next business day following the day of its receipt. The Pledgee may apply the net cash received from such income or interest to payment of any of the Secured Obligations, provided that the Pledgee shall account for and pay over to the Pledgor any such income or interest remaining after payment in full of the Secured Obligations then outstanding. So long as no Event of Default shall have occurred, the Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Purchase Agreement; provided, however, that the Pledgor shall not exercise or refrain from exercising any such right if, in the Pledgee's judgment, such -5- action would have a material adverse effect on the value of the Collateral or any part thereof; and, provided, further, that the Pledgor shall give the Pledgee at least five days' written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such rights. The Pledgee shall never be under any obligation to collect, attempt to collect, protect or enforce the Collateral or any security therefor, which the Pledgor agrees and undertakes to do at the Pledgor's expense, but the Pledgee may do so in its discretion at any time after the occurrence of an Event of Default and at such time the Pledgee shall have the right to take any steps by judicial process or otherwise as it may deem proper to effect the collection of all or any portion of the Collateral or to protect or to enforce the Collateral or any security therefor. All expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred or paid by the Pledgee in connection with or incident to any such collection or attempt to collect the Collateral or actions to protect or enforce the Collateral or any security therefor shall be borne by the Pledgor or reimbursed by the Pledgor to the Pledgee upon demand. The proceeds received by the Pledgee as a result of any such actions in collecting or enforcing or protecting the Collateral shall be utilized by the Pledgee in accordance with Section 10 hereof. 5. Further Assurances. The Pledgor agrees to take such actions and to execute such stock or bond powers or other Instruments and such other or different writings as the Pledgee may reasonably request further to perfect, confirm and assure the Pledgee's security interest in the Collateral and irrevocably authorizes the Pledgee, as Pledgor's agent and attorney-in-fact, to assist the Pledgee's realization thereon upon the occurrence of an Event of Default including, without limitation, the right to receive, indorse, and collect all instruments made payable to the Pledgor representing any dividend, interest payment or other distribution in respect of the Pledged Shares or any part thereof. 6. Events of Default. The occurrence of an Event of Default under the Note shall constitute an "Event of Default" hereunder. -6- 7. Rights and Remedies of the Pledgee Upon Default. If an Event of Default shall have occurred: (a) The Pledgee shall have and may, subject to compliance with federal and state securities laws, exercise with reference to the Collateral and the Secured Obligations any and all of the rights and remedies of a secured party under the Uniform Commercial Code ("UCC"), and as otherwise granted herein or under any other applicable law now or hereafter in effect executed by the Pledgor, including, without limitation, the right and power to sell, at public or private sale or sales, or otherwise dispose of, or otherwise utilize the Collateral and any part or parts thereof in any manner authorized or permitted under the UCC after default by a debtor, and to apply the proceeds thereof toward payment of any costs and expenses and attorneys' fees and expenses thereby incurred by the Pledgee and toward payment of the Secured Obligations in such order or manner as permitted by law. Specifically and without limiting the foregoing, the Pledgee shall have the right to take possession of all or any part of the Collateral, any certificate therefor or any security therefor and of all books, records, papers and documents of the Pledgor or in the Pledgor's possession or control relating to the Collateral which are not already in the Pledgee's possession, and for such purpose may enter upon any premises upon which any of the Collateral or any security therefor or any of said books, records, papers and documents are situated and remove the same therefrom without any liability for trespass or damages thereby occasioned. To the extent permitted by law, the Pledgor expressly waives any notice of sale or other disposition of the Collateral and all other rights or remedies of the Pledgor or formalities prescribed by law relative to sale or disposition of the Collateral or exercise of any other right or remedy of the Pledgee existing after default hereunder. The Pledgee shall have all other rights and remedies available, whether at law or in equity. (b) Upon notice by the Pledgee to the Pledgor, the Pledgee or its nominee or nominees shall have the sole and exclusive right to exercise all voting and consensual powers pertaining to the Collateral or any part thereof and may exercise such powers in such manner as the Pledgee may elect. (c) All dividends, payments of interest and other distributions of every character made upon or in respect of the Pledged Shares or any part thereof shall be deemed to be Collateral and shall be paid directly to and shall be held by the Pledgee as additional Collateral pledged under and subject to this Agreement. (d) All rights to marshaling of assets of the Pledgor, including any such right with respect to the Collateral, are hereby waived by the Pledgor. 8. Special Provisions for Pledged Shares. The Pledgor hereby acknowledges that the sale by the Pledgee of any of the Pledged Shares pursuant to the terms hereof in compliance with federal and applicable state or securities laws or the securities laws of any other applicable -7- jurisdiction exercising valid jurisdiction over the Pledged Shares (as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect, the "Securities Laws") may require strict limitations as to the manner in which the Pledgee or any subsequent transferee of the Pledged Shares may dispose of such securities. The Pledgor understands that in order to protect the Pledgee's interest it may be necessary to sell the Pledged Shares at a price less than the maximum price attainable if a sale were delayed or were made in another manner, such as a public offering requested under the Securities Laws. The Pledgor has no and waives any objection to a sale in such a manner. 9. Application of Proceeds by the Pledgee. In the event the Pledgee sells or otherwise disposes of the Collateral in the course of exercising the remedies provided for in Sections 8 or 9 hereof, any amounts held, realized or received by the Pledgee pursuant to the provisions hereof, including the proceeds of the sale of any of the Collateral or any part thereof, shall be applied by the Pledgee first toward the payment of any costs and expenses incurred by the Pledgee in enforcing this Agreement, then to any amounts otherwise due hereunder or under the Guaranty, and then as provided in the Purchase Agreement. Any amounts and any Collateral remaining after such application and after payment to the Pledgee of all of the Secured Obligations in full shall be paid or delivered as required by law, or as a court of competent jurisdiction may direct. The Pledgee shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Pledgee accords its own property, it being understood that the Pledgee shall not have any responsibility for (x) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Pledgee has or is deemed to have knowledge of such matters or (y) taking any necessary steps to preserve rights against any parties with respect to any Collateral. -8- 10. Absolute Interest. (a) All rights of the Pledgee hereunder, and all obligations of the Pledgor hereunder, shall be absolute and unconditional irrespective of (i) any lack of validity or enforceability of any provision of the Note, any agreement with respect to the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the, (iii) any exchange, release or non-perfection of any Collateral or any other security for or Collateral securing the Secured Obligations, or any release or amendment or waiver of or any consent to or departure from any guarantee or any other security, for all or any of the Secured Obligations or (iv) any other circumstance which might constitute a defense available to, or a discharge of, the Pledgor in respect of the Secured Obligations or this Agreement. (b) The Pledgee is hereby subrogated to all of the Pledgor's interests, rights and remedies in respect to the Collateral and all security now or hereafter existing with respect thereto and all guaranties and endorsements thereof and with respect thereto. 11. Termination. This Agreement and the security interests created hereunder shall terminate when all the Secured Obligations have been indefeasibly paid in full, at which time the Pledgee shall execute and deliver to the Pledgor all documents which the Pledgor shall reasonably request to evidence termination of such security interest and shall return physical possession of any Collateral then held by the Pledgee to the Pledgor; provided, however, that all indemnities of the Pledgor contained in this Agreement shall survive, and remain in full force and effect regardless of the termination of the security interest of this Agreement. 12. Additional Information. The Pledgor agrees to furnish the Pledgee from time to time such additional information and copies of such documents relating to this Agreement, the Collateral, the Secured Obligations and the Pledgor's financial condition as the Pledgee may reasonably request. 13. Notices. Any communication, notice or demand to be given to a party hereunder shall be in writing and delivered in person or duly sent by first class registered or certified mail, return receipt requested, postage prepaid, to such party at the address set forth on the signature page hereof. -9- 14. Indemnity and Expenses. The Pledgor agrees to indemnify the Pledgee, and the officers, directors, employees and agents of the Pledgee (with the foregoing referred to collectively as the "Indemnified Parties"), for, and to hold each Indemnified Party harmless against, any loss, liability, claim judgment, settlement, compromise, obligation, damage or penalty of any kind or nature, including the costs and expenses of the Indemnified Party incurred in defending itself against any claim of liability in connection with or arising out of this Agreement, unless arising from the gross negligence or willful misconduct of such Indemnified Party. 15. No Waiver; Cumulative Rights. No failure on the part of the Pledgee to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Pledgee of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power. Each and every right, remedy and power hereby granted to the Pledgee or allowed it by law or other agreement shall be cumulative and not exclusive of any other and may be exercised by the Pledgee from time to time. 16. Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, excluding the body of law relating to conflict of laws. 17. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute one and the same agreement. Each of the parties to this Agreement will be entitled to rely upon delivery by facsimile machine of an executed copy of this Agreement and acceptance of such facsimile copy will be legally effective to create a valid and binding agreement between the parties in accordance with the terms hereof. 18. Severability. If any one or more provisions of this Agreement should be declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired or prejudiced thereby. IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly executed as of the date first above written. -10- PLEDGOR: WEBB INTERACTIVE SERVICES, INC. By: /s/ Lindley S. Branson ---------------------------------------- Name: Lindley S. Branson Title: Vice President and General Counsel 1899 Wynkoop, Suite 600 -------------------------------------------- Denver, CO 80202 -------------------------------------------- PLEDGEE: JONA, INC. By: /s/ Neil A. McMurry ---------------------------------------- Name: Neil A. McMurry Title: President 1701 East E. Street -------------------------------------------- Casper, WY 82601 -------------------------------------------- Address -11- EX-5 7 dex5.txt PROMISSORY NOTE Exhibit 5 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE. PROMISSORY NOTE Date of Issuance: January 17, 2002 (the "Date of Issuance") Name of Holder: JONA, INC. (the "Holder") Principal Amount: $900,000.00 (the "Principal Amount") For good and valuable consideration received, Webb Interactive Services, Inc., a Colorado corporation (the "Company"), promises to pay to the Holder the Principal Amount, plus simple interest accrued on unpaid principal from the Date of Issuance until paid at the rate of ten percent (10%) per annum (the "Base Rate"). The Company's obligations under this Note are secured by a Pledge and Security Agreement as of even date herewith (the "Security Agreement.") The following is a statement of the rights of the Holder and the terms and conditions to which this Note is subject: 1. Payment. (a) Obligation. Subject to acceleration and mandatory prepayment upon the occurrence of any Event of Default, the outstanding principal under this Note and the accrued interest thereon will be due and payable on demand at any time on or after April 30, 2002 (the "Demand Payment Date"). All payments of principal and interest under this Note shall be payable in immediately available funds to an account at a bank designated in writing by the Holder. In the absence of any such written designation, any such principal or interest payment shall be deemed made on the date a check in the applicable amount payable to the order of Holder is received by the Holder at the address set forth below or such other address as the Holder shall designate in writing. (b) Interest Payment. The Company promises to pay interest on the Principal Amount at the Base Rate. Interest on this Note shall accrue from and including the date of issuance of this Note through and until repayment of the principal and payment of all accrued interest in full and the accrued interest shall be payable in full on the earlier to occur of the Demand Payment Date or the date the Note is accelerated pursuant to Section 1(e). (c) Prepayment. On ten (10) days' prior written notice to the Holder, the Company may prepay this Note in whole or in part at any time without penalty. Prepayments will be applied to accrued but unpaid interest first and then to unpaid principal. (d) Defaults. An Event of Default shall occur if: (i) the Company shall default in the payment of the principal of or any installment of interest on this Note, when and as the same shall become due and payable, whether at maturity, on demand, on a date fixed for payment thereof, at a date fixed for prepayment, by acceleration or otherwise, (ii) the Company shall fail to perform or observe any covenant, obligation or agreement contained herein and the Company has not remedied such default within fifteen (15) days after notice of default has been given by the Investor to the Company, (iii) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (a) relief in respect of the Company, or of a substantial part of its property or assets, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal or state bankruptcy, insolvency, receivership or similar law, (b) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company, or for a substantial part of its property or assets, or (c) the winding up or liquidation of the Company, and such proceeding or petition shall continue undismissed for 60 days, or any order or decree approving or ordering any of the foregoing shall be entered or (iv) the Company shall (a) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal or state bankruptcy, insolvency, receivership or similar law, (b) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described herein, (c) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (e) make a general assignment for the benefit of creditors, (f) become unable, admit in writing its inability or fail generally to pay its debts as they become due, (g) suspend the operation of its business or (h) take any action for the purpose of effecting any of the foregoing. (e) Acceleration. If an Event of Default occurs under Section 1(d)(iii) or (iv), then the outstanding principal of and all accrued interest on this Note shall automatically become immediately due and payable. If an Event of Default occurs under Section 1(d)(i) or (ii) and is continuing, the Holder, by written notice to the Company, may declare the outstanding principal of and all accrued interest on this Note immediately due and payable. Upon such declaration, such principal and interest shall become immediately due and payable. After April 30, 2002, if the default has not been cured or all amounts due paid to the Holder, then all such principal, interest, fees and other amounts shall be immediately due and payable and the Holder shall have all of its rights and remedies under this Note and the Security Agreement. (f) Enforcement. Upon the occurrence of any one or more Events of Default, the Holder may proceed to protect and enforce its rights hereunder by suit in equity, action at law or by other appropriate proceeding, and the Holder may pursue all of its -2- rights and remedies under this Note and the Security Agreement. The Holder shall have all rights and remedies available at law or in equity. If an Event of Default occurs, the Company will pay to the Holder such amounts as shall be sufficient to cover the costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) of such Holder due to, or incurred as a consequence of, such default. 2. Governing Law. This Note will be governed by and construed in accordance with the laws of the State of Colorado, excluding that body of law relating to conflict of laws. 3. Waiver. The Company hereby waives diligence, presentment, demand, protest and notice of dishonor. 4. Collection Expenses. If suit is brought for collection of this Note, the Company shall pay all reasonable expenses, including reasonable fees and costs of attorneys, incurred by the Holder in connection therewith whether or not such suit is prosecuted to judgment. IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first written above. WEBB INTERACTIVE SERVICES, INC. By /s/ Lindley S. Branson -------------------------------------- Its: Vice President and General Counsel ------------------------------------ Holder's Address: JONA, INC. - -------------------------- 1701 East E. Street - -------------------------- Casper, WY 82601 - -------------------------- -3- EX-6 8 dex6.txt JOINT FILING AGREEMENT Exhibit 6 JOINT FILING AGREEMENT The undersigned, Neil A. McMurry and Jona, Inc., hereby agree that this Schedule 13D relating to the securities of Webb Interactive Services, Inc. shall be filed on behalf of each of them. January 28, 2002. /s/ Neil A. McMurry ----------------------------------------- Neil A. McMurry JONA, INC. By: /s/ Neil A. McMurry ------------------------------------- Its: President -----END PRIVACY-ENHANCED MESSAGE-----