EXHIBIT 10.4
VISAER, INC.
SERIES A-1 CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of July 1, 2001
NOTE: - EXHIBITS B THROUGH I ARE NOT FILED HEREWITH BUT WILL BE FILED
SUPPLEMENTALLY UPON THE REQUEST OF THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBITS
Exhibit A List of Purchasers
Exhibit B Amended and Restated Certificate of Incorporation
Exhibit C Exceptions to Representations
Exhibit D Share Capitalization
Exhibit E Employee Invention Assignment, Confidentiality and
Non-Competition Agreement
Exhibit F Intentionally Omitted
Exhibit G Stockholders' Voting Agreement
Exhibit H Investor Rights Agreement
Exhibit I Right of First Refusal and Co-Sale Agreement
-ii-
VISAER, INC.
SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this
"Agreement") is dated as of July 1, 2001 and is entered into by and among
VISaer, Inc., a Delaware corporation (the "Company") and the individuals and
entities listed on Exhibit A hereto (the "Purchasers.")
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SHARES.
1.1 Authorization. The Company has, or before the Closing (as
defined in Section 2) will have, duly authorized the sale and
issuance, pursuant to the terms of this Agreement, of
97,230,804 shares of its Series A-1 Convertible Preferred
Stock, $.001 par value per share (the "Series A-1 Preferred,")
having the rights, restrictions, privileges and preferences
set forth in the Amended and Restated Certificate of
Incorporation of the Company attached hereto as Exhibit B (the
"Certificate.") The Company has, or before the Closing will
have, adopted and filed the Certificate with the Secretary of
State of the State of Delaware.
1.2 Sale of Shares. Subject to the terms and conditions of this
Agreement, at the Closing the Company will sell and issue to
each of the Purchasers, and each of the Purchasers will
purchase, the number of shares of Series A-1 Preferred set
forth opposite such Purchaser's name on Exhibit A for the
purchase price of $0.0801 per share (the "Purchase Price").
The shares of Series A-1 Preferred sold under this Agreement
are referred to as the "Shares." The Company's agreement with
each of the Purchasers is a separate agreement, and the sale
of Shares to each of the Purchasers is a separate sale.
1.3 Payment for the Shares. The purchasers will pay for the Shares
through the cancellation and surrender to the Company of the
promissory notes and the shares of common and preferred stock
of the Company held by them as of the Closing as set forth in
Exhibit A.
2. THE CLOSING. The closing (the "Closing") of the sale and purchase of
the Shares under this Agreement shall take place at the offices of the
Company at 10:00 a.m. on June 29, 2001, or at such other time, date and
place as are mutually agreeable to the parties. At the Closing, the
Company shall deliver to each of the Purchasers a certificate for the
number of Shares being purchased at the Closing by such Purchaser,
registered in the name of such Purchaser, against payment to the
Company of the Purchase Price. The date of the Closing is hereinafter
referred to as the "Closing Date." If at the Closing any of the
conditions specified in Section 6, below, shall not have been
fulfilled, each of the Purchasers shall, at its election, be relieved
of all of its obligations under this Agreement without thereby waiving
any other rights it may have by reason of such failure or such
non-fulfillment.
3. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and
warrants to each of the Purchasers that the statements contained in
this Section 3 are true, complete and correct except as disclosed by
the Company in Exhibit C hereto. Exhibit C shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs
contained in this Section 3, and the disclosures in any paragraph of
Exhibit C shall qualify only the corresponding paragraph of this
Section 3, unless otherwise specified. All references to the "Company"
in this Section 3 shall be deemed to also refer to its subsidiaries.
3.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and
authority to conduct its business as presently conducted and
as proposed to be conducted by it and to enter into and
perform this Agreement and all other agreements required to be
executed
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by the Company at or prior to the Closing pursuant to Section
6.4 (the "Ancillary Agreements") and to carry out the
transactions contemplated by this Agreement and the Ancillary
Agreements. The Company is duly qualified to do business as a
foreign corporation and is in good standing in the
Commonwealth of Massachusetts and in every other jurisdiction
in which the failure so to qualify would have a material
adverse effect on the business, prospects, assets or condition
(financial or otherwise) of the Company (a "Company Material
Adverse Effect.") True and correct copies of the By-Laws of
the Company, as amended to date and as will be in effect at
the Closing have been furnished to the Purchaser. The Company
has at all times complied with all provisions of its
Certificate and By-laws and is not in default under, or in
violation of, any such provision.
3.2 Capitalization. The authorized capital stock of the Company
(immediately prior to the Closing) is as set forth on Exhibit
D hereto. All of the issued and outstanding shares of Common
Stock and Preferred Stock have been duly authorized and
validly issued and are fully paid and nonassessable. Except as
provided in this Agreement or as set forth in Exhibit D, (i)
no subscription, warrant, option, convertible security or
other right (contingent or otherwise) to purchase or acquire
any shares of capital stock of the Company is authorized or
outstanding, (ii) the Company has no obligation (contingent or
otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or
distribute to holders of any shares of its capital stock any
evidences of indebtedness or assets of the Company, (iii) the
Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof, and (iv)
there are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company.
All of the issued and outstanding shares of capital stock of
the Company have been offered, issued and sold by the Company
in compliance with applicable federal and state securities
laws. Except as disclosed on Exhibit D and except as provided
herein, the Company is not under any obligation and has not
granted any rights to register under the Securities Act of
1933 any of its presently outstanding securities or any of its
securities that may subsequently be issued. To the Company's
knowledge, except as provided herein, no shareholder of the
Company is a party to any agreement with respect to the voting
of the Company's securities.
3.3 Subsidiaries, Etc. The Company has two active and one inactive
subsidiaries all of the outstanding stock of which is owned by
the Company. The Company does not own or control, directly or
indirectly, any shares of capital stock of any other
corporation or any interest in any partnership, joint venture
or other non-corporate business enterprise.
3.4 Security Holder Lists and Agreements. The Company has
furnished to the Purchasers a true and complete list of the
security holders of the Company, showing the number of shares
of Common Stock, Preferred Stock or other securities of the
Company held by each security holder as of the date of this
Agreement and, in the case of options, warrants and other
convertible securities, the exercise price thereof and the
number and type of securities issuable thereunder. Except as
provided in this Agreement, there are no agreements, written
or oral, between the Company and any holder of its securities,
or, to the Company's knowledge, among any holders of its
securities, relating to the acquisition (including without
limitation rights of first refusal, anti-dilution or
pre-emptive rights), disposition, registration under the
Securities Act of 1933, as amended (the "Securities Act"), or
voting of the capital stock of the Company other than those to
which the Purchasers are parties.
3.5 Issuance of Shares. The issuance, sale and delivery of the
Shares in accordance with this Agreement, and the issuance and
delivery of the shares of Common Stock issuable upon
conversion of the Shares, have been, or will be on or prior to
the Closing, duly authorized by all necessary corporate action
on the part of the Company, and all such shares have been duly
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reserved for issuance. The Shares when so issued, sold and
delivered against payment therefor in accordance with the
provisions of this Agreement, and the shares of Common Stock
issuable upon conversion of the Shares, when issued upon such
conversion, will be duly and validly issued, fully paid and
nonassessable.
3.6 Authority for Agreement; No Conflict. The execution, delivery
and performance by the Company of this Agreement and the
Ancillary Agreements, and the consummation by the Company of
the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate action. This
Agreement has been, and the Ancillary Agreements when executed
at the Closing will be, duly executed and delivered by the
Company and constitute valid and binding obligations of the
Company enforceable in accordance with their respective terms,
subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting generally the enforcement of creditors' rights
and subject to a court's discretionary authority with respect
to the granting of a decree ordering specific performance or
other equitable remedies. The execution and performance of the
transactions contemplated by this Agreement and the Ancillary
Agreements and compliance with their respective provisions by
the Company will not (a) conflict with or violate any
provision of the Certificate or By-laws of the Company; (b)
require on the part of the Company any filing with, or any
permit, authorization, consent or approval of, any court,
arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (each of
the foregoing is hereafter referred to as a "Governmental
Entity;") (c) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest (as defined
below) or other arrangement to which the Company is a party or
by which the Company is bound or to which its assets are
subject; (d) result in the imposition of any Security Interest
upon any assets of the Company; or (e) violate any order,
writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets.
For purposes of this Agreement, "Security Interest" means any
mortgage, pledge, security interest, encumbrance, charge, or
other lien (whether arising by contract or by operation of
law.
3.7 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing with, any Governmental Entity is
required on the part of the Company in connection with the
execution and delivery of this Agreement or the Ancillary
Agreements, the offer, issuance, sale and delivery of the
Shares, the issuance and delivery of the shares of Common
Stock issuable upon conversion of the Shares or the other
transactions to be consummated at the Closing, as contemplated
by this Agreement and the Ancillary Agreements, except such
filings as shall have been made prior to and shall be
effective on and as of the Closing and such filings required
to be made after the Closing under applicable federal and
state securities laws. Based on the representations made by
each of the Purchasers in Section 5 of this Agreement, the
offer and sale of the Shares to each of the Purchasers will be
in compliance with applicable federal and state securities
laws.
3.8 Litigation. Except as set forth in Exhibit C, there is no
action, suit or proceeding, or governmental inquiry or
investigation, pending, or, to the Company's knowledge, any
basis therefor or threat thereof, against the Company which
questions the validity of this Agreement or the right of the
Company to enter into it, or which might result, either
individually or in the aggregate, in a Company Material
Adverse Effect The Company is not subject to any outstanding
judgement, order or decree.
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3.9 Financial Statements. The Company has furnished to each of the
Purchasers a complete and correct copy of the audited
financial statements of the Company for the period ending
December 31, 2000 and the unaudited balance sheet of the
Company (the "Balance Sheet") at May 31, 2001 (the "Balance
Sheet Date") and the related statements of operations and cash
flow for the period then ended (collectively, the "Financial
Statements.") The Financial Statements are complete and
correct, are in accordance with the books and records of the
Company and present fairly the financial condition and results
of operations of the Company, at the dates and for the periods
indicated, and have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied,
except that the Financial Statements may not be in accordance
with GAAP because of the absence of footnotes normally
contained therein and are subject to normal year-end audit
adjustments which in the aggregate will not be material.
3.10 Absence of Undisclosed Liabilities. The Company does not have
any liability (whether known or unknown and whether absolute
or contingent), except for (a) liabilities shown on the
Balance Sheet and in the notes thereto; and (b) liabilities
which have arisen since the Balance Sheet Date in the ordinary
course of business and which do not exceed $10,000; and (c)
contractual and other liabilities incurred in the ordinary
course of business which are not required by GAAP to be
reflected on a balance sheet, and which are not in the
aggregate material.
3.11 Taxes. The amount shown on the Balance Sheet as provision for
taxes is sufficient in all respects for payment of all accrued
and unpaid federal, state, county, local and foreign taxes for
the period then ended and all prior periods. The Company has
filed or has obtained presently effective extensions with
respect to all federal, state, county, local and foreign tax
returns which are required to be filed by it, such returns are
true and correct and all taxes shown thereon to be due have
been timely paid. [Federal income tax returns of the Company
have not been audited by the Internal Revenue Service,] [and
no controversy with respect to taxes of any type is pending
or, to the Company's knowledge, threatened]. The Company has
withheld or collected from each payment made to its employees
the amount of all taxes required to be withheld or collected
therefrom and has paid all such amounts to the appropriate
taxing authorities when due. Neither the Company nor any of
its stockholders has ever filed (a) an election pursuant to
Section 1362 of the Internal Revenue Code of 1986, as amended
(the "Code"), that the Company be taxed as an S Corporation;
or (b) a consent pursuant to Section 341(f) of the Code
relating to collapsible corporations.
3.12 Property and Assets. The Company has good title to, or a valid
leasehold interest in, all of its material properties and
assets, including all properties and assets reflected in the
Balance Sheet, except those disposed of since the date thereof
in the ordinary course of business, and none of such
properties or assets is subject to any Security Interest other
than those the material terms of which are described in the
Balance Sheet or in Exhibit C.
3.13 Intellectual Property.
(a) The Company owns, free and clear of all Security
Interests, or has the valid right to use all
Intellectual Property (as defined below in this
Section 3.13) used by it in its business as currently
conducted or as currently proposed to be conducted.
No other person or entity (other than licensors of
software that is generally commercially available,
joint owners or licensors of Intellectual Property
under the agreements disclosed pursuant to
subparagraph (d) below and non-exclusive licensees of
the Company's Intellectual Property in the ordinary
course of the Company's business) has any rights to
any of the Intellectual Property owned or used by the
Company, and, to the Company's knowledge, no other
person or entity is infringing, violating or
misappropriating any of the Intellectual Property
that the Company owns. For purposes of this
Agreement, "Intellectual Property" means
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all (i) patents and patent applications; (ii)
copyrights and registrations thereof; (iii) mask
works and registrations and applications for
registration thereof; (iv) computer software, data
and documentation; (v) trade secrets and confidential
business information, whether patentable or
unpatentable and whether or not reduced to practice,
know-how, manufacturing and production processes and
techniques, research and development information,
copyrightable works, financial, marketing and
business data, pricing and cost information, business
and marketing plans and customer and supplier lists
and information; (vi) trademarks, service marks,
trade names, domain names and applications and
registrations therefor; and (vii) other proprietary
rights relating to any of the foregoing.
(b) None of the activities or business conducted by the
Company or proposed to be conducted by the Company
infringes, violates or constitutes a misappropriation
of (or in the past infringed, violated or constituted
a misappropriation of) any Intellectual Property of
any other person or entity. The Company has not
received any complaint, claim or notice alleging any
such infringement, violation or misappropriation, and
to the knowledge of the Company, there is no basis
for any such complaint, claim or notice.
(c) The Company has taken reasonable precautions (i) to
protect its rights in its Intellectual Property; and
(ii) to maintain the confidentiality of its trade
secrets, know-how and other confidential Intellectual
Property, and to the Company's knowledge, there have
been no acts or omissions (other than those made
based on reasonable, good faith business decisions)
by the officers, directors, shareholders and
employees of the Company the result of which would be
to materially compromise the rights of the Company to
apply for or enforce appropriate legal protection of
the Company's Intellectual Property.
(d) All of the Company's Intellectual Property has been
created by employees of the Company within the scope
of their employment by the Company or by independent
contractors of the Company who have executed
agreements expressly assigning all right, title and
interest in such Intellectual Property to the Company
and no portion of the Company's Intellectual Property
was jointly developed with any third party.
3.14 Insurance. The Company's insurance policies are in full force
and effect and are in amounts and of a nature which are
adequate and customary for the Company's business. All
premiums due on the Insurance Policies have been paid and
there is no default under any of the Insurance Policies. The
Company has not received any notice or other communication
from any issuer of the Insurance Policies canceling or
materially amending any of such policies, increasing any
deductibles or retained amounts thereunder, or increasing the
annual or other premiums payable thereunder, and, to the
knowledge of the Company, no such cancellation, amendment or
increase of deductibles, retainages or premiums is threatened.
3.15 Material Contracts and Obligations. All of the Company's
material agreements and contracts are valid, binding and in
full force and effect. Neither the Company, nor, to the
Company's knowledge, any other party thereto, is in default of
any of its obligations under any of the agreements or
contracts in a manner which could have a Company Material
Adverse Effect.
3.16 Compliance. The Company has, in all material respects,
complied with all laws, regulations and orders applicable to
its present and proposed business and has all material permits
and licenses required thereby. There is no term or provision
of any mortgage, indenture, contract, agreement or instrument
to which the Company is a party or by which it is bound, or,
to the Company's knowledge, of any provision of any state or
federal judgment, decree, order, statute, rule or regulation
applicable to or binding upon the Company, which materially
adversely affects or, so far as the Company may now foresee,
in the future is reasonably likely to result in or have a
Company Material Adverse Effect.
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3.17 Absence of Changes. Since the Balance Sheet Date, there has
not been (other than changes expressly contemplated by this
Agreement and the Ancillary Agreements) (a) any change in the
assets, liabilities, financial condition or operations of the
Company from those reflected on the Balance Sheet, except
changes in the ordinary course of business that have not been,
either individually or in the aggregate, materially adverse;
(b) any adverse change (individually or in the aggregate),
except in the ordinary course of business, in the contingent
obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise; (c) any damage, destruction
or loss, whether or not covered by insurance, materially and
adversely affecting the properties or business of the Company;
(d) any waiver or compromise by the Company of a valuable
right or of a material debt owed to it; (e) any loans made by
the Company to its employees, officers or directors other than
travel advances made in the ordinary course of business; (f)
any extraordinary increases in the compensation of any
Company's employees, officers or directors not approved by the
Board of Directors; (g) any declaration or any payment of any
dividend or other distribution of the assets of the Company;
(h) any issuance or a sale by the Company of any shares of its
Common Stock, Preferred Stock or other securities other than
pursuant to the Company's stock option plans; (i) to the
Company's knowledge, any other event or condition of any
character that has materially and adversely affected the
Company's business or prospects; or (j) any agreement or
commitment by the Company to do any of the things described in
this Section 3.17.
3.18 Employees. All employees of the Company who have access to
confidential or proprietary information of the Company have
executed and delivered nondisclosure, non-competition and
assignment of invention agreements, and all of such agreements
are in full force and effect. The Company is not aware that
any employee of the Company has plans to terminate his or her
employment relationship with the Company. The Company has
complied in all material respects with all applicable laws
relating to wages, hours, equal opportunity, collective
bargaining, workers' compensation insurance and the payment of
social security and other taxes. None of the employees of the
Company is represented by any labor union, and there is no
labor strike or other labor trouble pending with respect to
the Company (including, without limitation, any organizational
drive) or, to the Company's knowledge, threatened.
3.19 ERISA. Each of the Company's employee benefit plans complies
in all material respects with all applicable requirements of
ERISA and the Code.
3.20 Books and Records. The minute books of the Company contain
complete and accurate records of all material corporate
actions of its stockholders and its Board of Directors and
committees thereof. The stock ledger of the Company is
complete and reflects all issuances, transfers, repurchases
and cancellations of shares of capital stock of the Company.
3.21 Permits. The Company has all permits that are required for the
Company to conduct its business as presently or proposed to be
conducted, except for those the absence of which would not
have a Company Material Adverse Effect. All such permits are
in full force and effect and, to the knowledge of the Company,
no suspension or cancellation of any of such permits is
threatened.
3.22 Environmental Matters.
(a) The Company has complied in all material respects
with all applicable Environmental Laws (as defined
below in this Section 3.22(a)). There is no pending
or, to the knowledge of the Company, threatened civil
or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation,
inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving
the Company. For purposes of this Agreement,
"Environmental Law" means any federal, state or local
law, statute, rule or regulation or the common law
relating to the protection of human health or the
environment.
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(b) Neither the Company, nor to the knowledge of the
Company, has any third party released any Materials
of Environmental Concern (as defined below in this
Section 3.22(b)) into the environment at any parcel
of real property or any facility formerly or
currently owned, operated or controlled by the
Company. The Company is not aware of any releases of
Materials of Environmental Concern at parcels of real
property of facilities other than those owned,
operated or controlled by the Company that could
reasonably be expected to have an impact on the real
property or facilities owned, operated or controlled
by the Company. For purposes of this Agreement,
"Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous
substances, solid wastes and hazardous wastes, toxic
materials, oil or petroleum and petroleum products,
or any other material subject to regulation under any
Environmental Law.
(c) The Company is not aware of any material
environmental liability of the solid and hazardous
waste transporters and treatment, storage and
disposal facilities that have been utilized by the
Company.
(d) The Company is not aware of any environmental report,
investigation or audit (whether conducted by or on
behalf of the Company or a third party, and whether
done at the initiative of the company or directed by
a Governmental Entity or other third party) issued or
conducted relating to premises currently or
previously owned or operated by the Company.
3.23 U.S. Real Property Holding Corporation. The Company is not now
and has never been a "United States Real Property Holding
Corporation" as defined in Section 897(c)(2) of the Code and
Section 1.897-2(b) of the Regulations promulgated by the
Internal Revenue Service.
3.24 Related Party Transactions. Except as disclosed on Exhibit C,
no employee, officer, shareholder or director of the Company
or member of his or her immediate family is indebted to the
Company, nor is the Company indebted (or committed to make
loans or extend or guarantee credit) to any of them, other
than (i) for payment of salary for services rendered; (ii)
reimbursement for reasonable expenses incurred on behalf of
the Company; and (iii) for other standard employee benefits
made generally available to all employees (not including stock
option agreements outstanding under any stock option plan
approved by the Board of Directors of the Company.) To the
Company's knowledge, none of such persons has any direct or
indirect ownership interest in any firm or corporation with
which the Company is affiliated or with which the Company has
a business relationship, or any firm or corporation that
competes with the Company, except that employees, officers or
directors of the Company and members of their immediate
families may own stock in publicly traded companies with which
the Company has a business relationship, or that may compete
with the Company. To the Company's knowledge, no officer,
director, or shareholder or any member of their immediate
families is, directly or indirectly, interested in any
contract with the Company (other than such contracts as they
relate to any such person's employment with the Company or
ownership of capital stock of the Company, or as otherwise
contemplated by this Agreement).
3.25 Disclosures. Neither this Agreement nor any exhibit hereto,
nor any report, certificate or instrument furnished to any of
the Purchasers or their special counsel in connection with the
transactions contemplated by this Agreement when read
together, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were
made, not misleading.
4. INTENTIONALLY OMITTED
5. REPRESENTATIONS OF THE PURCHASERS. Each of the Purchasers severally
represents and warrants to the Company as follows:
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5.1 Investment. Such Purchaser is acquiring the Shares, and the
shares of Common Stock into which the Shares may be converted,
for its own account for investment and not with a view to, or
for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling the
same; and, except as contemplated by this Agreement and the
exhibits hereto, such Purchaser has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness
or commitment providing for the disposition thereof. Such
Purchaser is an "accredited investor" as defined in Rule
501(a) under the Securities Act.
5.2 Authority. Such Purchaser has full power and authority to
enter into and to perform this Agreement in accordance with
its terms. Any Purchaser that is a corporation, partnership or
trust represents that it has not been organized, reorganized
or recapitalized specifically for the purpose of investing in
the Company.
5.3 Experience. Such Purchaser has carefully reviewed the
representations concerning the Company contained in this
Agreement and has made detailed inquiry concerning the
Company, its business and its personnel; the officers of the
Company have made available to such Purchaser any and all
written information which it has requested and have answered
to such Purchaser's satisfaction all inquiries made by such
Purchaser; and such Purchaser has sufficient knowledge and
experience in finance and business that it is capable of
evaluating the risks and merits of its investment in the
Company and such Purchaser is able financially to bear the
risks thereof.
6. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS. The obligation of each
of the Purchasers to purchase Shares at the Closing is subject to the
fulfillment, or the waiver by such Purchaser, of each of the following
conditions on or before the Closing:
6.1 Accuracy of Representations and Warranties. Each
representation and warranty contained in Section 3 shall be
true on and as of the Closing Date with the same effect as
though such representation and warranty had been made on and
as of that date except for those representations and
warranties that are given with respect to a specified date.
6.2 Performance. The Company shall have performed and complied
with all agreements and conditions contained in this Agreement
required to be performed or complied with by the Company prior
to or at the Closing.
6.3 Ancillary Agreements.
(a) Stockholders' Voting Agreement. The Stockholders'
Voting Agreement attached hereto as Exhibit G (the
"Stockholders' Voting Agreement") shall have been
executed and delivered by the Company, each of the
Purchasers and by each of Xxxxx X. X. Xxxxxxxx, Chief
Executive Officer, Xxxxx X. Xxxxxxxx, President and
Xxxxxxxx X. Xxxxxx, Chief Technology Officer of the
Company (collectively referred to as the "Key
Executives.") All such action shall have been taken
as may be necessary to elect a Board of Directors of
the Company, effective upon the Closing, in
accordance with the Stockholders' Voting Agreement.
(b) Investor Rights Agreement. The Investor Rights
Agreement attached hereto as Exhibit H (the "Investor
Rights Agreement") shall have been executed and
delivered by the Company and each of the Purchasers.
(c) Right of First Refusal and Co-Sale Agreement. The
Right of First Refusal and Co-Sale Agreement attached
hereto as Exhibit I (the "Co-Sale Agreement") shall
have been executed and delivered by the Company and
each of the Purchasers and the Key Executives.
(d) Non-Competition Agreement. Each Key Executives and
the Company has entered into an Employee Invention
Assignment, Confidentiality and Non-Competition
Agreement in the form of Exhibit E hereto.
Page 8 of 16
(e) Amended and Restated Certificate of Incorporation.
The Amended and Restated Certificate of Incorporation
of the Company attached as Exhibit B shall have been
filed with the Secretary of State of the State of
Delaware.
6.4 Certificates and Documents. The Company shall have delivered
to the Purchasers:
(a) The Certificate of the Company, as amended and in
effect as of the Closing Date, certified by the
Secretary of State of the State of Delaware;
(b) Certificates, as of the most recent practicable
dates, as to the corporate good standing of the
Company issued by the Secretary of State of the State
of Delaware and the Secretary of the Commonwealth of
Massachusetts;
(c) Resolutions of the Board of Directors and
stockholders of the Company, authorizing and
approving all matters in connection with this
Agreement and the transactions contemplated hereby,
certified by the Secretary or Assistant Secretary of
the Company as of the Closing Date.
6.5 Compliance Certificates. The Company shall have delivered to
the Purchasers a certificate, executed by the Chief Executive
Officer of the Company, dated the Closing Date, certifying to
the fulfillment of the conditions specified in Sections 6.1
and 6.2 of this Agreement.
6.6 No Material Adverse Change. There shall not have been any
material adverse change in the business, financial conditions
or prospects of the Company and its subsidiaries taken as a
whole.
6.7 Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and
form to the Purchasers, and the Purchasers shall have received
all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
6.8 No Actions Restraining. No suit, proceeding, or investigation
shall have been commenced or threatened by any governmental
authority or Person on any grounds to restrain or enjoin, or
seek damages on account of, the consummation of the
transactions contemplated by this Agreement.
7. CONDITION TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company under Section 1.2 of this Agreement are subject to the
representations and warranties of the Purchasers contained in Section 5
being true on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of that
date.
8. AFFIRMATIVE COVENANTS OF THE COMPANY.
8.1 Inspection and Observation. The Company shall permit each
Purchaser, or any authorized representative thereof, to visit
and inspect the properties of the Company, including its
corporate and financial records, and to discuss its business
and finances with officers of the Company, during normal
business hours following reasonable notice and as often as may
be reasonably requested.
8.2 Financial Statements and Other Financial Information. The
Company shall deliver to each Purchaser:
(a) Monthly, unaudited financial statements prepared
substantially in accordance with GAAP as usual and
customary for private companies of similar size
within the United States as at the end of such month
within 15 days of month end, with commentary by the
Chief Executive Officer or the President.
Page 9 of 16
(b) within 90 days after the end of each fiscal year of
the Company, an audited balance sheet of the Company
prepared in accordance with GAAP as at the end of
such year and audited statements of income and of
cash flows of the Company for such year, certified
with an unqualified opinion by certified public
accountants of established national reputation
selected by the Company and subject to the reasonable
prior approval of the Purchasers; and
(c) An annual budget for the subsequent fiscal year
within 30 days prior to current year end;
8.3 Material Events. The Company shall deliver to each Purchaser:
(a) Notice of reportable events within 15 days of their
occurrence. Reportable events will include offers to
buy the Company, resignations or serious illnesses of
corporate officers, lawsuits and lenders' default
notices.
(b) Notice of any known default in any major contract,
this Agreement or any of the Ancillary Agreements or
any loan agreements within 15 days of its occurrence.
(c) Such other notices, information and data with respect
to the Company as the Company delivers to the holders
of its capital stock at the same time it delivers
such items to such holders.
(d) With reasonable promptness, such other information
and data as such Purchaser may from time to time
reasonably request.
8.4 Insurance. The Company shall maintain adequate property and
business insurance, including without limitation insurance
against loss, damage, fire, theft, public liability and other
risks.
8.5 Agreements with Employees. The Company shall require all
persons now or hereafter employed by the Company who have
access to confidential and proprietary information of the
Company to enter into nondisclosure and assignment of
inventions agreements substantially in a form approved by the
Board of Directors of the Company.
8.6 Directors.
(a) The Company shall promptly reimburse in full each
director of the Company who is not an employee of the
Company for all of his or her reasonable
out-of-pocket expenses incurred in attending each
meeting of the Board of Directors of the Company or
any committee thereof.
(b) The Board of Directors shall meet at least quarterly,
unless otherwise agreed by a majority of the members
of the Board of Directors who are not employees of
the Company or a subsidiary of the Company.
8.7 Reservation of Common Stock. The Company shall reserve and
maintain a sufficient number of shares of Common Stock for
issuance upon conversion of all of the outstanding Shares.
8.8 Related Party Transactions. The Company shall not enter into
any agreement with any stockholder, officer or director of the
Company, or any "affiliate" or "associate" of such persons (as
such terms are defined in the rules and regulations
promulgated under the Securities Act), including without
limitation any agreement or other arrangement providing for
the furnishing of services by, rental of real or personal
property from, or otherwise requiring payments to, any such
person or entity without the consent of at least a majority of
the members of the Company's Board of Directors having no
interest in such agreement or arrangement.
8.9 Compliance with Law; Maintenance of Corporate Existence,
Properties and Records. The Company shall comply with all
laws, including environmental laws, applicable to it, except
where the failure to comply would not be reasonably likely to
result in a material adverse
Page 10 of 16
effect on the business, assets, operations, prospects or
financial or other condition of the Company. The Company shall
comply with and conduct its business in accordance with its
Certificate of Incorporation and Bylaws. The Company will
preserve, protect and maintain its corporate existence,
rights, franchises and privileges and all properties necessary
or useful to the proper conduct of its business. The Company
will at all times maintain proper books of record and account
which fairly present the financial condition and results of
operation of the Company in accordance with GAAP and maintain
internal control systems to the reasonable satisfaction of the
Purchasers.
8.10 Termination of Covenants. The covenants of the Company
contained in Sections 8.1 through Section 8.9 shall terminate,
and be of no further force or effect, upon the closing of the
Company's first public offering of Common Stock pursuant to an
effective registration statement under the Securities Act
resulting in net proceeds to the Company of at least
$15,000,000 and at a price to the public at least equal to
three times the conversion price per share of the Series A-1
Preferred (as adjusted for stock splits, stock dividends,
recapitalizations and similar events.)
9. TRANSFER OF SHARES.
9.1 Restricted Shares. "Restricted Shares" means (a) the Shares;
(b) the shares of Common Stock issued or issuable upon
conversion of the Shares; (c) any shares of capital stock of
the Company acquired by the Purchasers pursuant to the
Investor Rights Agreement or the Co-Sale Agreement; and (iv)
any other shares of capital stock of the Company issued in
respect of such shares (as a result of stock splits, stock
dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which
are Restricted Shares shall cease to be Restricted Shares (x)
upon any sale pursuant to a registration statement under the
Securities Act, under Section 4(1) of the Securities Act or
under Rule 144 under the Securities Act; or (y) at such time
as they become eligible for sale under Rule 144(k) under the
Securities Act.
9.2 Requirements for Transfer.
(a) Restricted Shares shall not be sold or transferred
unless either (i) they first shall have been
registered under the Securities Act; or (ii) such
sale or transfer is exempt from the registration
requirements of the Securities Act.
(b) Notwithstanding the foregoing, but provided that each
transferee described below agrees in writing to be
subject to the terms of this Section 9 to the same
extent as if it were the original Purchaser
hereunder, no registration shall be required for
(i) a transfer by a Purchaser which is a
corporation to a majority owned subsidiary
of such corporation;
(ii) a transfer by a Purchaser which is a
partnership to a partner of such
partnership, or to an affiliated limited
partnership managed by the same management
company or managing general partner of such
Purchaser or by an entity which controls, is
controlled by, or is under common control
with, such management company or managing
general partner;
(iii) a transfer by a Purchaser which is a trust
to any beneficiary of the trust; or
(iv) a transfer by a Purchaser which is a limited
liability company to a member of such
limited liability company.
(c) no registration shall be required for a transfer made
in accordance with Rule 144 under the Securities Act.
Page 11 of 16
9.3 Legend. Each certificate representing Restricted Shares shall
bear a customary Securities Act legend, which shall be removed
from the certificates representing any Restricted Shares at
the request of the holder thereof at such time as such shares
become eligible for resale pursuant to Rule 144(k) under the
Securities Act.
9.4 Rule 144A Information. The Company shall, at all times during
which it is neither subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), nor exempt from reporting
pursuant to Rule 12g3-2(b) under the Exchange Act, upon the
written request of any Purchaser, provide in writing to such
Purchaser and to any prospective transferee of any Restricted
Shares of such Purchaser the information concerning the
Company described in Rule 144A(d)(4) under the Securities Act
("Rule 144A Information"). The Company's obligations under
this Section 9.4 shall at all times be contingent upon receipt
from the prospective transferee of Restricted Shares of a
written agreement to take all reasonable precautions to
safeguard the Rule 144A Information from disclosure to anyone
other than persons who will assist such transferee in
evaluating the purchase of any Restricted Shares.
10. MISCELLANEOUS.
10.1 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement, and the
rights and obligations of each Purchaser hereunder, may be
assigned by such Purchaser to any person or entity to which
Shares are transferred by such Purchaser, and such transferee
shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides written notice of such
assignment to the Company. The Company may not assign its
rights under this Agreement.
10.2 Confidentiality. Each Purchaser agrees to keep confidential
and will not disclose, divulge or use for any purpose other
than to monitor its investment in the Company any
confidential, proprietary or secret information which such
Purchaser may obtain from the Company pursuant to financial
statements, reports and other materials submitted by the
Company to such Purchaser pursuant to this Agreement, or
pursuant to visitation or inspection rights granted hereunder
("Confidential Information,") unless such Confidential
Information is known, or until such Confidential Information
becomes known, to the public (other than as a result of a
breach of this Section 10.2 by such Purchaser;) provided,
however, that a Purchaser may disclose Confidential
Information (a) to its attorneys, accountants, consultants,
and other professionals to the extent necessary to obtain
their services in connection with monitoring its investment in
the Company; (b) to any prospective purchaser of any Shares
from such Purchaser as long as such prospective purchaser
agrees in writing to be bound by the provisions of this
Section 10.2; (c) to any affiliate of such Purchaser or to a
partner, stockholder or subsidiary of such Purchaser, provided
that such affiliate agrees in writing to be bound by the
provisions of this Section 10.2, or (d) as may otherwise be
required by law, including but not limited to Securities and
Exchange Commission and stock exchange disclosure requirements
applicable to any party hereof, provided that the Purchaser
takes reasonable steps to minimize the extent of any such
required disclosure.
10.3 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the closing
of the transactions contemplated hereby for a period of three
years.
10.4 Expenses. The Company shall pay at the Closing the reasonable
expenses incurred by the Purchasers in conjunction with their
investment in the Series A-1 Preferred (including their
reasonable legal fees and expenses) up to a maximum of
$15,000.
Page 12 of 16
10.5 Brokers. The Company and each Purchaser (a) represents and
warrants to the other parties hereto that it has not retained
a finder or broker in connection with the transactions
contemplated by this Agreement; and (b) will indemnify and
save the other parties harmless from and against any and all
claims, liabilities or obligations with respect to brokerage
or finders' fees or commissions, or consulting fees in
connection with the transactions contemplated by this
Agreement asserted by any person on the basis of any statement
or representation alleged to have been made by such
indemnifying party.
10.6 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
10.7 Specific Performance. In addition to any and all other
remedies that may be available at law in the event of any
breach of this Agreement, each Purchaser shall be entitled to
specific performance of the agreements and obligations of the
Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent
jurisdiction.
10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware (without reference to the conflicts of law provisions
thereof.)
10.9 Notices.
(a) All notices, requests, consents, and other
communications under this Agreement shall be in
writing and either shall be delivered by hand against
a receipt therefor; or sent by reputable overnight
express courier service as follows:
If to the Company, at its headquarters address,
attention of the President, or at such other address
or addresses as may have been furnished in writing by
the Company to the Purchasers;
If to a Purchaser, at its address set forth on
Exhibit A, or at such other address or addresses as
may have been furnished to the Company in writing by
such Purchaser;
(b) Notices provided in accordance with this Section 10.9
shall be deemed delivered upon personal delivery or
(x) in the case of notices provided within the
continental United States, at noon on the first
business day following deposit with a reputable
overnight express courier service, or (ii) in the
case of notices provided outside the continental
United States at noon on the second business day next
following deposit with a reputable overnight express
courier service.
(c) Any party may give any notice, request, consent or
other communication under this Agreement using any
other means, but no such notice, request, consent or
other communication shall be deemed to have been duly
given unless and until it is actually received by the
party for whom it is intended. Any party may change
the address to which notices, requests, consents or
other communications hereunder are to be delivered to
it by giving the other parties notice in the manner
set forth in this Section.
10.10 Complete Agreement. This Agreement including the exhibits
referred to herein and the Ancillary Agreements constitute the
entire agreement and understanding of the parties hereto with
respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter
including, without limitation, that certain Summary of Terms
dated May 21, 2001.
10.11 Amendments and Waivers. Except as otherwise expressly set
forth in this Agreement, any term of this Agreement may be
amended or terminated and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the
written consent of the Company and the holders of
Page 13 of 16
at least 51% of the shares of Common Stock issued or issuable
upon conversion of the Shares; ; provided however that any
amendment or termination which materially adversely affect a
party to this Agreement shall require the written consent of
such party, in addition to the majority consent. Any
amendment, termination or waiver effected in accordance with
this Section 10.11 shall be binding upon each holder of any
Shares (including shares of Common Stock into which such
Shares have been converted) even if they do not execute such
consent, on each future holder of all such securities and on
the Company. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.
10.12 Pronouns. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and
pronouns shall include the plural, and vice versa.
10.13 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which shall constitute
one and the same document. This Agreement may be executed by
facsimile signatures.
10.14 Section Headings. The section headings are for the convenience
of the parties and are not intended to alter, modify, amend,
limit, or restrict the contractual obligations of the parties.
10.15 Aggregation of Shares. The Shares held by any Purchasers who
are affiliates of each other and their assignees shall be
aggregated for purposes of determining the availability of any
right or the applicability of any limitation under this
Agreement. For the avoidance of doubt, an affiliate shall
include, without limitation, (a) an entity which controls, is
controlled by or is under common control with, a Purchaser;
(b) as to a Purchaser which is a limited partnership, any of
its limited partners or retired partners, or the estate of any
such partner, and any affiliated limited partnership managed
by the same management company or managing general partner of
such Purchaser or by any entity which controls, is controlled
by, or is under common control with, such management company
or managing general partner; or (c) any beneficiary of a trust
which is a Purchaser.
[The remainder of this page is intentionally left blank]
Page 14 of 16
EXECUTED AS OF THE DATE FIRST WRITTEN ABOVE.
VISAER, INC.
By:
-----------------------------------------------------
Xxxxx X. X. Xxxxxxxx, Chief Executive Officer
INTELLIGENT SYSTEMS CORPORATION
By:
-----------------------------------------------------
J. Xxxxxx Xxxxxxx, President
XXXXX & XXXXXXXX, LTD. ("GWL")
By:
-----------------------------------------------------
Xxxx X. Xxxxxxxx
Managing Director, GW Partners
General Partner of GWL
GW INVESTMENTS, LTD ("GWI")
By:
-----------------------------------------------------
Xxxx X. Xxxxxxxx
President, JYW, Inc.
General Partner of GWI
JYW, INC. ("JYW")
BY:
-----------------------------------------------------
Xxxx X. Xxxxxxxx, President
Page 15 of 16
EXHIBIT A
AMOUNT OF SHARES OF
SHARES OF SERIES DEBT SHARES OF PREFERRED STOCK COMMON
PURCHASER A-1 PREFERRED CANCELLED CANCELED(1) CANCELLED
---------------- --------- ------------------------- ---------
INTELLIGENT SYSTEMS CORPORATION 72,923,103 $2,470,665 Series A - 1,433,692 245,122
0000 Xxxxxxxxxxx Xxxx Series D - 16,778
Xxxxxxxx, XX 00000
XXXXX & XXXXXXXX, LTD. 13,757,719 $434,862 Series A - 52,760 2,434
0000 Xxxxxxxxx Xxxx - Xxxxx 0000 Series B - 958,800
Xxxxxxx, XX00000 Series D - 9,865
GW INVESTMENTS, LTD. 9,908,388 $327,613 Series A - 36,846 1,487
0000 Xxxxxxxxx Xxxx - Xxxxx 0000 Series B - 669,900
Xxxxxxx, XX00000 Series D - 6,913
JYW, INC. 641,594 $51,538 -0- -0-
0000 Xxxxxxxxx Xxxx - Xxxxx 0000
Xxxxxxx, XX00000
(1) Refers to old Series A, B and D.
Page 16 of 16
