EXHIBIT 10.1
INVENTA CORPORATION
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
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July 8, 1994
TABLE OF CONTENTS
Page
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1. Purchase and Sale of Series A Preferred Stock .......... 1
1.1 Sale and Issuance of Common Stock .............. 1
1.2 Closing ........................................ 1
1.3 Warrants ....................................... 1
2. Representations and Warranties of the Company .......... 1
2.1 Organization, Good Standing and Qualification .. 2
2.2 Capitalization ................................. 2
2.3 Subsidiaries ................................... 2
2.4 Authorization .................................. 2
2.5 Valid Issuance of Securities ................... 2
2.6 Governmental Consents .......................... 3
2.7 Litigation ..................................... 3
2.8 Intangible Property ............................ 3
2.9 Compliance with Other Instruments .............. 4
2.10 Disclosure ..................................... 4
2.11 Registration Rights ............................ 4
2.12 Title to Property and Assets ................... 4
2.13 Financial Statements ........................... 5
2.14 Changes ........................................ 5
2.15 Minute Books ................................... 6
2.16 Labor Agreements and Actions ................... 6
3. Representations and Warranties of the Investors ........ 7
3.1 Authorization .................................. 7
3.2 Purchase Entirely for Own Account .............. 7
3.3 Disclosure of Information ...................... 7
3.4 Economic Risk .................................. 7
3.5 Restricted Securities .......................... 8
3.6 Further Limitations on Disposition ............. 8
3.7 Legends ........................................ 8
4. California Commissioner of Corporations ................ 9
4.1 Corporate Securities Law ....................... 9
5. Conditions of Investor's Obligations at Closing ........ 9
5.1 Representations and Warranties ................. 9
5.2 Performance .................................... 9
5.3 Articles of Incorporation ...................... 9
5.4 Compliance Certificate ......................... 9
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TABLE OF CONTENTS
(continued)
Page
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6. Conditions of the Company's Obligations at Closing ..... 9
6.1 Representations and Warranties ................. 9
6.2 Payment of Purchase Price ...................... 10
6.3 Legal Matters .................................. 10
7. Registration Rights .................................... 10
7.1 Definitions .................................... 10
7.2 Restrictive Legend ............................. 11
7.3 Notice of Proposed Transfers ................... 11
7.4 Demand Registration ............................ 12
7.5 Piggyback Registration ......................... 12
7.6 Underwriting ................................... 13
7.7 Blue Sky ....................................... 14
7.8 Expenses of Registration ....................... 15
7.9 Registration Procedures ........................ 15
7.10 Information Furnished by Holder ................ 15
7.11 Indemnification ................................ 15
7.12 Rule 144 Reporting ............................. 17
7.13 Transfer of Registration Rights ................ 18
8. Right of First Refusal ................................. 18
8.1 Grant of Right ................................. 18
8.2 New Securities ................................. 18
8.3 Notice ......................................... 19
8.4 Sale after Notice .............................. 19
8.5 Expiration ..................................... 19
8.6 Assignment ..................................... 20
9. Covenants of the Company ............................... 20
9.1 Delivery of Financial Statements ............... 20
9.2 Termination of Information Covenant ............ 21
9.3 Key Man Life Insurance ......................... 21
9.4 Board of Directors ............................. 21
10. Miscellaneous .......................................... 21
10.1 Survival of Warranties ......................... 21
10.2 Transfer; Successors and Assigns ............... 21
10.3 Governing Law .................................. 22
10.4 Counterparts ................................... 22
10.5 Titles and Subtitles ........................... 22
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TABLE OF CONTENTS
(continued)
Page
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10.6 Notices ........................................ 22
10.7 Finder's Fee ................................... 22
10.8 Expenses ....................................... 22
10.9 Amendments and Waivers ......................... 22
10.10 Severability ................................... 23
10.11 Aggregation of Stock ........................... 23
10.12 Entire Agreement ............................... 23
EXHIBIT A Schedule of Investors
EXHIBIT B Amended and Restated Articles of Incorporation
EXHIBIT C Schedule of Exceptions to Representations and Warranties
EXHIBIT D Form of Warrant
EXHIBIT E List of Registrable Securities
EXHIBIT F Form of Proprietary Information Agreement
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SERIES A PREFERRED STOCK PURCHASE AGREEMENT
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THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT ("Agreement") is made as
of the 8th day of July 1994 by and between Inventa Corporation, a California
corporation (the "Company"), and the persons and entities listed on the Schedule
of Investors attached hereto as Exhibit A (the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Series A Preferred Stock
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1.1. Sale and Issuance of Common Stock.
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(a) The Company shall adopt and file with the Secretary of
State of California on or before the Closing (as defined below) the Amended and
Restated Articles of Incorporation in the form attached hereto as Exhibit B.
(b) Subject to the terms and conditions of this Agreement,
the Investors agree to purchase at the Closing and the Company agrees to sell
and issue to the Investors at the Closing that number of shares of the Company's
Series A Preferred Stock (the "Stock") for the aggregate purchase price set
forth opposite each Investor's name on Exhibit A attached hereto, at a purchase
price of $1.00 per share.
1.2 Closing Date; Delivery. The purchase and sale of the Stock
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shall take place at the offices of Wilson, Sonsini, Xxxxxxxx & Xxxxxx, 000 Xxxx
Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, at 9:00 a.m., on July 8, 1994, or at such
other time and place as the Company and the Investors mutually agree upon,
orally or in writing (which time and place are designated as the "Closing"). At
the Closing, the Company shall deliver to each Investor a certificate
representing the Stock which such Investor is purchasing against delivery to the
Company by such Investor of a check made payable to the Company or wire transfer
of the aggregate purchase price therefor.
1.3. Warrants. At the Closing, the Company shall issue to each
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Investor a Warrant ("Warrant") in the form attached hereto as Exhibit D. Each
Warrant shall be exercisable at the Investor's option for that number of shares
of Series A Preferred Stock of the Company equal to one-fourth of the number of
shares of Stock purchased by such Investor at the Closing, at an exercise price
of $1.00 per share. The Warrants shall expire at the earlier of (i) December 31,
1999, (ii) a registered public offering of the Company's securities, or (iii) a
merger, reorganization or sale of all or substantially all of the Company's
assets.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Investors that,
except as set forth on a Schedule of Exceptions attached hereto as Exhibit C,
specifically identifying the relevant subparagraph hereof, which exceptions
shall be deemed to be representations and warranties as if made hereunder:
2.1. Organization, Good Standing and Qualification. The Company is
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a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties.
2.2 Capitalization.
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(a) The authorized capital of the Company will consist,
immediately prior to the Closing, of (i) 500,000 shares of Preferred Stock, all
of which are designated Series A Preferred Stock, and none of which are issued
and outstanding, and (ii) 10,000,000 shares of Common Stock, of which 2,250,000
shares are issued and outstanding. The Company has reserved 675,000 shares of
its Common Stock for issuance pursuant to its 1993 Stock Option Plan. Except as
set forth in the Schedule of Exceptions attached as Exhibit C hereto, there are
no outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements, orally or in writing, for the purchase or acquisition
from the Company of any shares of its capital stock.
2.3 Subsidiaries. The Company does not presently own or control,
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directly or indirectly, any interest in any other corporation, association, or
other business entity.
2.4 Authorization. All corporate action on the part of the
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Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance and
delivery of the Stock has been taken or will be taken prior to the Closing, and
this Agreement constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms.
2.5 Valid Issuance of Securities.
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(a) The Stock that is being issued to the Investors
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable. Based in part upon the representations of the Investors
in this Agreement, the Stock will be issued in compliance with all applicable
federal and state securities laws.
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(b) The shares of Common Stock outstanding prior to the
Closing are all duly and validly authorized and issued, fully paid and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws.
(c) The Warrants to be issued to the Investors in
connection with the transactions contemplated by this Agreement will be duly and
validly authorized and issued, fully paid and nonassessable, and will be issued
in compliance with all applicable federal and state securities laws.
2.6 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for (a) the filing pursuant to Section
25102(f) of the California Corporate Securities Law of 1968, as amended, and the
rules thereunder, which filing will be effected in accordance with such section,
and (b) compliance with the Blue Sky Laws of the various states in which the
Investors may reside, which compliance will be effected in accordance with such
laws. The Company currently holds all licenses, permits, franchises,
registrations and qualifications which may be required to conduct its business,
and all such licenses, permits, franchises, registrations and qualifications are
valid and in full force and effect.
2.7 Litigation. There is no action, suit, proceeding or
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investigation pending or currently threatened against the Company that questions
the validity of this Agreement or the right of the Company to enter into it, or
to consummate the transactions contemplated hereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any of the Company's employees, their
use in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
2.8 Intangible Property. The Company, to its knowledge after due
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inquiry, and that of its officers after due inquiry, has all right, title and
interest in and to all intangible property and
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technology or is able to obtain on reasonable terms, all permits, licenses and
other authority necessary to conduct its business as presently conducted. The
Company, and, to the knowledge of the Company, its officers and employees, have
not improperly used and are not making improper use of any confidential
information or trade secrets of others, including those of any former employer
of an officer or employee.
2.9 Compliance with Other Instruments.
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(a) The Company is not in violation or default of any
provisions of its Amended and Restated Articles of Incorporation or Bylaws or of
any instrument, judgment, order, writ, decree or contract to which it is a party
or by which it is bound or, to its knowledge, of any provision of federal or
state statute, rule or regulation applicable to the Company. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not 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, judgment, order,
writ, decree, contract, rule, or statute, or of the Company's Restated Articles
of Incorporation or Bylaws, or an event which results in the creation of any
lien, charge or encumbrance upon any assets of the Company.
(b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss of
any right granted under any license, distribution or other agreement.
2.10 Disclosure. The Company has fully provided the Investors with
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all the information which the Investors have requested for deciding whether to
acquire the Stock and all information which the Company believes is reasonably
necessary to enable the Investors to make such decision. Neither this Agreement
nor any other statements or certificates made or delivered in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading,
except that, with respect to financial projections, the Company represents only
that such projections were prepared in good faith and that the Company believes
there is a reasonable basis for such projections.
2.11 Registration Rights. Except as provided in Section 7 of this
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Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.12 Title to Property and Assets. The Company owns its property
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and assets free and clear of all mortgages, liens, loans
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and encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such property or assets. With respect to the property and assets it leases,
the Company is in compliance with such leases and, to the best of its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances.
2.13 Financial Statements. The Company has delivered to the
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Investor its financial statements (balance sheet and profit and loss statement
and statement of shareholders equity) (i) at April 30, 1994 and the four (4)
month period then ended and (ii) at December 31, 1993 and for the fiscal year
then ended (collectively, the "Financial Statements"). The Financial Statements
are complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and with each other. The Financial
Statements accurately set out and describe the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein.
Except as set forth in the Financial Statements, the Company has no liabilities,
contingent or otherwise, of a nature required by generally accepted accounting
principles to be reflected in a balance sheet or disclosed in the notes thereto,
other than liabilities incurred in the ordinary course of business subsequent to
April 30, 1994.
2.14 Changes. Since April 30, 1994 there has not been:
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(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business which
have not been, in the aggregate, materially adverse.
(b) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the Company (as
such business is presently conducted and as it is proposed to be conducted);
(c) any waiver by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
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(e) any change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
to which the Company or any of such assets or properties is subject;
(f) any material change in any compensation arrangement or
agreement with any employee; or
(g) to the Company's knowledge, any other event or condition
of any character which might materially and adversely affect the assets,
properties, financial condition, operating results or business of the Company
(as such business is presently conducted and as it is proposed to be conducted).
2.15 Minute Books. The Company has offered to provide to the
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Investors the minute books of the Company, which contain a complete summary of
all meetings of directors and shareholders since the time of incorporation and
reflect all transactions referred to in such minutes accurately in all material
respects.
2.16 Labor Agreements and Actions. The Company is not bound by or
----------------------------
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
The employment of each officer and employee of the Company is terminable at the
will of the Company.
2.17 Employee Plans. The Company has no "employee welfare benefit
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plans" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"). The Company (i) has not been required to contribute to, (ii)
has not terminated or withdrawn from, and (iii) is not aware of any withdrawal
liability assessed against the Company with respect to any defined benefit plan
as defined in Section 3(35) of ERISA or multiemployer plan as defined in Section
4001 of ERISA in which employees or former employees of the Company have
participated.
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2.18 Employees. The Company has not knowingly violated any
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employment-related laws, including, without limitation, laws relating to equal
employment opportunity, overtime pay and collective bargaining. To the
Company's knowledge, no key employee or sales representative of the Company, and
no group of employees, has any plans to terminate his or her employment with the
Company. Each United States employee of the Company with access to confidential
or proprietary information has executed a Proprietary Information Agreement, the
form of which is attached hereto as Exhibit F.
3. Representations and Warranties of the Investors. Each Investor for
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itself hereby represents and warrants to the Company that:
3.1 Authorization. This Agreement constitutes its valid and
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legally binding obligation, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made
---------------------------------
with the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Stock will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same.
By executing this Agreement, the Investor further represents that the Investor
does not presently have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Stock. The Investor represents that it
has full power and authority to enter into this Agreement.
3.3 Disclosure of Information. The Investor believes it has
-------------------------
received information that it considers necessary or appropriate for deciding
whether to acquire the Stock. The Investor further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Stock. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
Section 2 of this Agreement or the right of the Investor to rely thereon.
3.4 Economic Risk. The Investor has the capacity to protect his
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own interests in connection with the purchase of the Stock, is capable of
evaluating the merits and risks of investment in the Company, can make an
informed investment decision by reason of (i) his preexisting personal or
business relationship with the Company or any of its officers, directors, or
control persons, or (ii) his business and financial knowledge and experience or
the
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business and financial knowledge and experience of my professional advisers,
and is able to bear the substantial economic risks of an investment in the Stock
for an indefinite period of time.
3.5 Restricted Securities. It understands that the shares of
---------------------
Common Stock sold hereunder are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such shares may be resold without registration under the
Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, the Investor represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
3.6 Further Limitations on Disposition. Without in any way
----------------------------------
limiting the representations set forth above, the Investor further agrees not to
make any disposition of all or any portion of the Stock unless and until:
(a) There is then in effect a Registration Statement under
the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) The Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, the Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration under the Act.
(c) Notwithstanding the provisions of paragraphs (a) and
(b) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by the Investor to a shareholder, partner or other
affiliate of the Investor, if the transferee or transferees agree in writing to
be subject to the terms hereof to the same extent as if they were the Investor
hereunder.
3.7 Legends. It is understood that the Stock, and the shares of
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Common Stock issuable upon conversion thereof and any securities issued in
respect thereof or exchange therefor may bear one or all of the following
legends:
(a) The legend set forth in Section 7.2 hereof.
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations.
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(c) Any legend required by the Blue Sky laws of any other state
to the extent such laws are applicable to the shares represented by the
certificate so legended.
4. California Commissioner of Corporations.
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4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT IS
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, THE ISSUANCE OF SUCH SECURITIES OR THE
PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
5. Conditions of Investor's Obligations at Closing. The obligations of
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the Investors under Section 1.1 of this Agreement are subject to the
fulfillment, on or before the First Closing, of each of the following
conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true and correct in
all material respects as of the Closing.
5.2 Performance. The Company shall have performed and complied
-----------
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
5.3 Articles of Incorporation. The Company shall have filed with,
-------------------------
and have had accepted for filing by, the California Secretary of State the
Amended and Restated Articles of Incorporation of the Company attached as
Exhibit B hereto.
5.4 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Investors at the Closing a certificate certifying that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled.
6. Conditions of the Company's Obligations at Closing. The
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obligations of the Company to the Investors under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions
by the Investor:
6.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investors contained in Section 3 shall be true and correct in
all material respects as of the Closing.
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6.2 Payment of Purchase Price. The Investors shall have delivered
-------------------------
to the Company the purchase price specified in Section 1.1 hereof.
6.3 Legal Matters. All material matters of a legal nature which
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pertain to this Agreement, and the transactions contemplated hereby, shall have
been reasonably approved by counsel to the Company.
7. Registration Rights. The Company covenants and agrees as follows:
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7.1 Definitions. For purposes of this Section 7:
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(a) "Commission" shall mean the Securities and Exchange
----------
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Holder" shall mean any holder of outstanding
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Registrable Securities which have not been sold to the public or an assignee or
transferee of Registration rights as permitted by Section 7.13.
(c) "Initiating Holders" shall mean Holders who in the
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aggregate hold at least forty percent (40%) of the Registrable Securities.
(d) The terms "Register", "Registered" and "Registration"
-------- ---------- ------------
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act ("Registration Statement"), and
the declaration or ordering of the effectiveness of such Registration Statement.
(e) "Registrable Securities" shall mean any Common Stock
----------------------
held by the Holder as set forth on Exhibit E attached hereto, or other
securities issued as a dividend or other distribution with respect to, in
exchange for or in replacement of Registrable Securities.
(f) "Registration Expenses" shall mean all expenses incurred
---------------------
by the Company in complying with Section 7.4 or 7.5 of this Agreement,
including, without limitation, all federal and state registration, qualification
and filing fees, printing expenses, fees and disbursements of counsel for the
Company and of special counsel for the Holders (if different from the Company),
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such registration and excluding any Selling Expenses.
(g) "Securities Act" shall mean the Securities Act of 1933,
--------------
as amended, or any similar federal statute, and the
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rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
(h) "Selling Expenses" shall mean all underwriting discounts
----------------
and selling commissions applicable to the sale of Registrable Securities
pursuant to this Agreement.
7.2 Restrictive Legend . Each certificate representing (i)
------------------
the Registrable Securities and (ii) any other securities issued in respect of
the Registrable Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 7.3 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
The Investor and each Holder consents to the Company making a notation
on its records and giving instructions to any transfer agent of the Common Stock
in order to implement the restrictions on transfer established in this Section
7.
7.3 Notice of Proposed Transfers . The holder of each
----------------------------
certificate representing restricted securities as that term is defined in Rule
144 by acceptance thereof agrees to comply in all respects with the provisions
of this Section 7.3. Prior to any proposed sale, assignment, transfer or pledge
of any restricted securities (other than (i) a transfer not involving a change
in beneficial ownership or (ii) in transactions involving the distribution
without consideration of restricted securities by any of the Holders to any of
its partners, retired partners) unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer, sale, assignment or pledge. Each such notice shall
describe the manner and circumstances of the proposed transfer, sale, assignment
or pledge in sufficient detail, and shall be accompanied, at such holder's
expense by either (i) a written opinion, addressed to the Company, of legal
counsel who shall be,
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and whose legal opinion shall be, reasonably satisfactory to the Company
(provided that no such opinion shall be required for transfers pursuant to Rule
144), to the effect that the proposed transfer of the restricted securities may
be effected without registration under the Securities Act, or (ii) a "no action"
letter from the Commission to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the
Commission that action be taken with respect thereto, whereupon the holder of
such restricted securities shall be entitled to transfer such restricted
securities in accordance with the terms of the notice delivered by the holder to
the Company. Each certificate evidencing the restricted securities transferred
as above provided shall bear, except if such transfer is made pursuant to Rule
144, the appropriate restrictive legend set forth in Section 7.2 above, except
that such certificate shall not bear such restrictive legend if in the opinion
of counsel for such holder and the Company such legend, is not required in order
to establish compliance with any provision of the Securities Act.
7.4 Demand Registration.
-------------------
(a) Request for Registration on Form S-3. Subject to the
------------------------------------
terms of this Agreement, in the event that the Company shall receive from the
Initiating Holders a written request that the Company effect any Registration on
Form S-3 (or any successor form to Form S-3 regardless of its designation) for
an offering of Registrable Securities the reasonably anticipated aggregate
offering price to the public of which would exceed $1,000,000, the Company
shall: (i) promptly give written notice of the proposed Registration to all
other Holders; and (ii) as soon as practicable, use its best efforts to effect
Registration of the Registrable Securities specified in such request, together
with any Registrable Securities of any Holder joining in such request as are
specified in a written request made within twenty (20) days after the written
notice from the Company. The Company shall not be obligated to effect more than
four such Registrations under this Section 7.4(a), nor more than one such
Registration in any twelve-month period.
(b) Registration of Other Securities. Any Registration
--------------------------------
Statement filed pursuant to the request of the Initiating Holders under this
Section 7.4 shall only include Registrable Securities.
7.5 Piggyback Registration. Subject to the terms of this
----------------------
Agreement, if at any time or from time-to-time, the Company shall determine to
register any of its securities, either for its own account or the account of a
security holder or holders, other than a registration on Form S-8 relating
solely to employee stock option or purchase plans, a registration on Form S-4
relating solely to an SEC Rule 145 transaction, a registration on any other
-12-
form (other than Form S-1 or S-3) which does not include substantially the same
information as would be required to be included in a Registration Statement
covering the sale of Registrable Securities, the Company will: (i) promptly give
each Holder written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under the applicable Blue Sky or other state securities laws) and (ii) include
in such Registration (and any related registration and/or qualification under
Blue Sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request delivered to the
Company by any Holder within 30 days after delivery of such written notice from
the Company.
7.6 Underwriting.
------------
(a) Notice of Underwriting. If a Registration of which the
----------------------
Company gives notice is for a Registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 7.4(a) or 7.5. In such event, the right of any
Holder to Registration shall be conditioned upon such underwriting and the
inclusion of such Holder's Registrable Securities in such underwriting to the
extent provided in this Section 7.6. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company and any
other holders distributing their securities through such underwriting) enter
into an underwriting agreement with the Underwriter's Representative for such
offering. The Holders shall have no right to participate in the selection of the
underwriters for an offering pursuant to this Section 7.6.
(b) Marketing Limitation. In the event the Underwriter's
--------------------
Representative advises the Holders seeking Registration of Registrable
Securities in writing that market factors (including, without limitation, the
aggregate number of shares of Common Stock requested to be Registered, the
general condition of the market, and the status of the persons proposing to sell
securities pursuant to the Registration) require a limitation of the number of
shares to be underwritten, the Underwriter's Representative may limit, but not
to less than 10% of the total number of shares proposed to be registered under
this Section 7.6 (unless such Registration is the Company's initial public
offering, in which case no limitation on reduction shall be imposed), the number
of shares of Registrable Securities to be included in such Registration and
underwriting; provided however, that any Registrable Securities so excluded
shall retain any and all Registration rights set forth in this Section.
(c) Allocation of Shares. In the event that the
--------------------
Underwriter's Representative limits the number of shares to be included in a
Registration pursuant to Section 7.4(b), the number
-13-
of shares to be included in such Registration shall be allocated in the
following manner:
(i) in the case of a Registration pursuant to
Section 7.5, shares held by persons who are not legally entitled to include
shares in such Registration shall first be excluded from such Registration and
underwriting to the extent required by such limitation. If a limitation of the
number of shares is still required after such exclusion, shares of Registrable
Securities shall next be excluded from such Registration and underwriting to the
extent required by such limitation, all prior to any limitation on the shares to
be Registered by the Company.
The number of shares that may be included in the
Registration and underwriting by selling shareholders shall be allocated among
all Holders thereof and other holders of securities other than Registrable
Securities requesting and legally entitled to include shares in such
Registration, in proportion, as nearly as practicable, to the respective amounts
of securities (including Registrable Securities) which such Holders and such
other holders would otherwise be entitled to include in such Registration. No
Registrable Securities or other securities excluded from the underwriting by
reason of this Section 7.6(c) shall be included in the Registration Statement.
(d) Withdrawal. If any Holder disapproves of the terms of
----------
any such underwriting, he may elect to withdraw therefrom by written notice to
the Company and the underwriter delivered at least seven days prior to the
effective date of the Registration Statement. Any Registrable Securities or
other securities excluded or withdrawn from such underwriting shall be withdrawn
from such Registration.
7.7 Blue Sky. In the event of any Registration of Registrable
--------
Securities pursuant to Section 7.4 or 7.5, the Company will exercise its best
efforts to register and/or qualify the securities covered by the Registration
Statement under such other securities or Blue Sky laws of such jurisdictions
(not exceeding 20 unless otherwise agreed to by the Company) as shall be
reasonably appropriate for the distribution of such securities; provided,
however, that (i) the Company shall not be required to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions, and (ii) notwithstanding anything in this Agreement to the
contrary, in the event any jurisdiction in which the securities shall be
qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the securities be borne by selling
shareholders, such expenses shall be payable pro rata by selling shareholders.
-14-
7.8 Expenses of Registration. Registration expenses incurred with
------------------------
no more than two Registrations pursuant to Section 7.4, and all Registration
Expenses incurred in connection with Registrations pursuant to Section 7.5,
shall be borne by the Company, excluding underwriting discounts and commissions.
All Selling Expenses shall be borne by the holders of the securities Registered
pro rata on the basis of the number of shares registered.
7.9 Registration Procedures. The Company will keep each Holder
-----------------------
whose Registrable Securities are included in any Registration pursuant to this
Agreement advised as to the initiation and completion of such Registration. The
Company shall: (a) keep such Registration effective for a period of 120 days or
until the Holder or Holders have completed the distribution described in the
Registration Statement relating thereto, whichever first occurs; and (b) furnish
such number of prospectuses (including preliminary prospectuses) and other
documents as a Holder from time to time reasonably may request.
7.10 Information Furnished by Holder. It shall be a condition
-------------------------------
precedent of the Company's obligations under this Section that each Holder of
Registrable Securities included in any Registration furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
or Holders as the Company may reasonably request.
7.11 Indemnification.
---------------
(a) Company's Indemnification of Holders. To the extent
------------------------------------
permitted by law, the Company shall indemnify each Holder, each of its officers,
directors and constituent partners, legal counsel for the Holders, and each
person controlling such Holder, with respect to which Registration,
qualification or compliance of Registrable Securities has been effected pursuant
to this Agreement against all claims, losses, damages or liabilities (or actions
in respect thereof) to the extent such claims, losses, damages or liabilities
arise out of or are based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or other document
(including any related Registration Statement) incident to any such
Registration, qualification or compliance, or are based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such Registration, qualification or compliance;
and the Company will reimburse each such Holder, such directors, officers,
partners or law firm, each such underwriter and each person who controls any
such Holder or underwriter, for any legal and any other expenses
-15-
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action; provided, however, that the indemnity
contained in this Section 7.11 shall not apply to amounts paid in settlement of
any such claim, loss, damage, liability or action if settlement is effected
without the consent of the Company (which consent shall not unreasonably be
withheld); and provided, further, that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based upon any untrue statement or omission based upon
written information furnished to the Company by such Holder, officer, director,
partner, counsel or controlling person and stated to be specifically for use in
connection with the Registration and offering of securities of the Company.
(b) Holder's Indemnification of Company. To the extent permitted
-----------------------------------
by law, each Holder shall, if Registrable Securities held by such Holder are
included in the securities as to which such Registration, qualification or
compliance is being effected pursuant to this Agreement, indemnify the Company,
each of its directors and officers, each legal counsel and independent
accountant of the Company, each underwriter, if any, of the Company's securities
covered by such a Registration Statement, each person who controls the Company
or such underwriter within the meaning of the Securities Act, and each other
such Holder, each of its officers, directors and constituent partners and each
person controlling such other Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based upon any
untrue statement (or alleged untrue statement) of a material fact contained in
any such Registration Statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by such Holder of any rule or regulation
promulgated under the Securities Act applicable to such Holder and relating to
action or inaction required of such Holder in connection with any such
Registration, qualification or compliance; and will reimburse the Company, such
Holders, such directors, officers, partners, persons, law and accounting firms,
underwriters and control persons for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder, or an officer, director, constituent
partner, counsel or controlling persons of such Holder, and stated to be
specifically for use in connection with the Registration and offering of
securities of the Company.
-16-
(c) Indemnification Procedure. Promptly after receipt by
-------------------------
an indemnified party under this Section 7.11 of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 7.11 notify the
indemnifying party in writing of the commencement thereof and generally
summarize such action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim; provided, however, that
the indemnifying party shall be entitled to select counsel for the defense of
such claim with the approval of any parties entitled to indemnification, which
approval shall not be unreasonably withheld; provided further, however, that if
either party reasonably determines that there may be a conflict between the
position of the Company and the Holders in conducting the defense of such
action, suit or proceeding by reason of recognized claims for indemnity under
this Section 7.11 then counsel for such party shall be entitled to conduct the
defense to the extent reasonably determined by such counsel to be necessary to
protect the interest of such party. The failure to notify an indemnifying party
promptly of the commencement of any such action, if prejudicial to the ability
of the indemnifying party to defend such action, shall relieve such indemnifying
party, to the extent so prejudiced, of any liability to the indemnified party
under this Section 7.11 but the omission so to notify the indemnifying party
will not relieve such party of any liability that such party may have to any
indemnified party otherwise other than under this Section 7.11.
7.12 Rule 144 Reporting. With a view to making available the
------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the restricted securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended.
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any time
after it has become subject to such reporting requirements);
(c) So long as a Purchaser owns any restricted securities
to furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed
-17-
by the Company for an offering of its securities to the general public), and of
the Securities Act and the Securities Exchange Act of 1934 (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Purchaser may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Purchaser to sell
any such securities without registration.
7.13 Transfer of Registration Rights. The rights to cause the
-------------------------------
Company to register securities granted Holders under Sections 7.4 and 7.5 may be
assigned to a transferee or assignee reasonably acceptable to the Company in
connection with any transfer or assignment of Registrable Securities by a Holder
provided that (i) such transfer may otherwise be effected in accordance with
applicable securities laws, and (ii) such assignee or transferee acquires either
(A) at least 50,000 shares of Registrable Securities or (B) all Registrable
Securities held by such transferring or assigning Holder. Notwithstanding the
foregoing, the rights to cause the Company to register securities may be
assigned to any constituent partner of a Holder, without compliance with item
(ii) above, provided written notice thereof is promptly given to the Company.
8. Right of First Refusal.
----------------------
8.1 Grant of Right. Except as set forth in Section 8.5, the
--------------
Company hereby grants to each Investor who continues to hold Stock the right of
first refusal to purchase all or any part of such Investor's Pro Rata Share (as
hereinafter defined) of the New Securities (as defined in Section 8.2) which the
Company may, from time to time, propose to sell and issue. The Investors may
purchase said New Securities on the same terms and at the same price at which
the Company proposes to sell the New Securities. The "Pro Rata Share" of each
Investor, for purposes of this right of first refusal, is the ratio of the total
number of shares of Common Stock held by such Investor, including (i) any shares
of Common Stock into which shares of Preferred Stock held by such Investor are
convertible, and (ii) any shares deliverable upon the exercise of options of
other rights to purchase Common Stock held by such Investor, to the total number
of shares of Common Stock outstanding immediately prior to the issuance of the
New Securities (including (i) any shares of Common Stock into which outstanding
shares of Preferred Stock are convertible and (ii) any shares deliverable upon
the exercise of options of other rights to purchase Common Stock held by such
Investor).
8.2 New Securities. "New Securities" shall mean any capital
--------------
stock of the Company, whether now authorized or not, and any rights, options or
warrants to purchase said capital stock, and
-18-
securities of any type whatsoever that are, or may become, convertible into said
capital stock; provided, however, that "New Securities" does not include (i) the
-------- -------
shares of Stock purchased pursuant to this Agreement or other securities issued
or issuable upon conversion of the Stock ("Conversion Shares"), (ii) securities
offered pursuant to a registration statement filed under the Securities Act of
1933 ("Securities Act"), (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all of
the assets or other reorganization, (iv) shares offered pursuant to lease
financing transactions or bank or lending institution financing transactions,
and (v) all securities hereafter issued or issuable to officers, directors,
employees or consultants of the Company (for the primary purpose of soliciting
or retaining their employment or services) pursuant to any employee or
consultant stock offering, plan or arrangement approved by the Board of
Directors.
8.3 Notice. In the event the Company proposes to undertake
------
an issuance of New Securities, it shall give to the Investors written notice
(the "Notice") of its intention, describing the type of New Securities, number
of shares, the price, the terms upon which the Company proposes to issue the
same, and notice to the effect that each Investor must respond to such Notice
within thirty (30) days after the date thereof. The Investors shall have thirty
(30) days from the date of such Notice to purchase any or all of the New
Securities for the price and upon the terms specified in the Notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased and forwarding payment for such New Securities to the Company if
immediate payment is required by such terms, or in any event no later than
forty-five (45) days after the date of the Notice.
8.4 Sale after Notice. In the event any Investor fails to
-----------------
exercise in full the right of first refusal within said thirty (30) day period,
the Company shall have ninety (90) days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within thirty (30) days from the date of said agreement) to
sell the New Securities respecting which such Investor's rights were not
exercised, at a price and upon general terms no more favorable to the Investors
thereof than specified in the Notice. In the event the Company has not sold the
New Securities within said ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within thirty (30) days from the
date of said agreement), the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the Investors in the manner
provided above.
8.5 Expiration. The right of first refusal granted under this
----------
Section 8 shall expire upon the earlier of:
-19-
(a) The closing of the Company's sale of its Common Stock in a
bona fide, firm commitment underwritten public offering pursuant to a
registration statement declared effective by the Securities and Exchange
Commission under the Securities Act of 1933.; or
(b) The date on which the Company is acquired by another entity by
merger, purchase of substantially all of its assets or other reorganization.
8.6 Assignment. The right of first refusal granted under this
----------
Section 8 is assignable by the Investors to any transferee of a minimum of Fifty
Thousand (50,000) shares of Preferred Stock or the Common Stock into which it
has been converted.
9. Covenants of the Company.
------------------------
9.1 Delivery of Financial Statements. The Company shall deliver to
--------------------------------
the Investors:
(a) as soon as practicable after the end of each fiscal year of
the Company an income statement for such fiscal year, a balance sheet of the
Company as of the end of such year, and a schedule as to the sources and
applications of funds for such year, such year-end financial reports to be
audited and in reasonable detail, prepared in accordance with generally accepted
accounting principles ("GAAP");
(b) as soon as practicable after the end of each month of each
fiscal quarter of the Company an unaudited profit or loss statement and schedule
as to the sources and application of funds for each quarterly reporting period
and an unaudited balance sheet as of the end of such quarter in reasonable
detail;
(c) within ten (10) days of the end of each month, an unaudited
balance sheet as of the end of such month, including a comparison to plan, in
reasonable detail; provided, however, that the Company shall be required to
deliver such documents as required under this Section 9.1(c) only to Investors
(and affiliates of each Investor whose shares shall be aggregated with each such
Investor for purposes of this section), continuing to hold at least 100,000
shares of Series A Preferred Stock or Common Stock of the Company; and
(d) as soon as practicable after the end of each fiscal year of
the Company an annual business plan and budget; provided, however, that the
Company shall be required to deliver such documents as required under this
Section 9.1(d) only to Investors (and affiliates of each Investor whose shares
shall be aggregated with each such Investor for purposes of this section)
-20-
continuing to hold at least 100,000 shares of Series A Preferred Stock or Common
Stock of the Company.
9.2 Termination of Information Covenant. The covenant set forth in
-----------------------------------
Section 9.1 shall terminate as to the Investors and be of no further force or
effect upon the initial sale of securities pursuant to a registration statement
filed by the Company under the Securities Act in connection with the firm
commitment underwritten offering of its securities to the general public is
consummated.
9.3 Key Man Life Insurance. Within thirty (30) days after the date of
----------------------
the Closing the Company shall obtain key man life insurance in an amount not
less than $2,000,000, with proceeds payable to the Company, on the life of Xxxxx
Xxxxxxxxx.
9.4 Board of Directors.
------------------
(a) If upon the Closing, the number of authorized directors of
the Company is three, then as soon as practicable after the Closing, the Company
shall cause to be elected to its Board of Directors (i) one representative
elected by the Investors, and (ii) two representatives elected by the holders of
Common Stock of the Company, at least one of which shall be reasonably
acceptable to the Investors.
(b) If upon the Closing, the number of authorized directors of
the Company is five, then as soon as practicable after the Closing, the Company
shall cause to be elected to its Board of Directors (i) one representative
elected by the Investors, (ii) two representatives elected by the holders of
Common Stock of the Company, at least one of which shall be reasonably
acceptable to the Investors, and (iii) two representatives elected by the
Investors and the holders of Common Stock of the Company voting together as a
single class.
10. Miscellaneous.
-------------
10.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
10.2 Transfer; Successors and Assigns. The terms and conditions of
--------------------------------
this Agreement shall inure to the benefit of and be binding upon the respective
successors and 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 assigns any rights, remedies, obliga-
-21-
tions, or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
10.3 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
10.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
10.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
10.7 Finder's Fee. Except as elsewhere disclosed in this Agreement,
------------
or in Exhibit C hereto, each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, employees, or
representatives are responsible.
The Company agrees to indemnify and hold harmless the Investor from
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
10.8 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
-22-
10.9 Amendments and Waivers. Other than as provided in Section 7
----------------------
hereof, any term of this Agreement may be amended and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and a majority of the Investors, provided that any term of Section 7 may
be amended and the observance of any term of Section 7 may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the holders of a majority of
the then-outstanding Registrable Securities. Any amendment or waiver effected in
accordance with this Section shall be binding upon each transferee of any Stock
or Registrable Securities, each future holder of all such securities, and the
Company.
10.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
10.11 Aggregation of Stock. All shares of Common Stock held or
--------------------
acquired by affiliated entities or person shall be aggregated for the purpose of
determining the availability of any rights under Section 7 of this Agreement.
10.12 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
hereto are expressly canceled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVENTA CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx,
President
Address: 0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
-23-
INVESTORS:
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxx X. Xxxxxxx
--------------------------- ---------------------------
XXXXXX XXXXXXXX XXXXX X. XXXXXXX
/s/ Xxxxxx Xxxxxxxxx /s/ Xxxxxxxxx X. Xxxxxx
--------------------------- ---------------------------
XXXXXX XXXXXXXXX XXXXXXXXX X. XXXXXX
/s/ Xxxxxx Xxxxxxxxxxxxx /s/ Xxxx Xxxxxxxxxxx
--------------------------- ---------------------------
XXXXXX XXXXXXXXXXXXX XXXX XXXXXXXXXXX
/s/ Xxxx X. Xxxxxxxxxx /s/ Xxxxxx Xxxxxx
--------------------------- ---------------------------
XXXX X. XXXXXXXXXX XXXXXX XXXXXX
/s/ Electra X. xx Xxxxxxx XXXXXX G. AND XXXXXXX X.
--------------------------- DUCOMMUN CHARITABLE ANNUITY
ELECTRA X. xx XXXXXXX TRUST, u/d/t dated 7/21/83
By: /s/ Xxxxxx Xxxxxxxx
-----------------------
Title: Trustee
--------------------
-24-
EXHIBIT A
---------
SCHEDULE OF INVESTORS
Name and Address Shares Amount
---------------------------- -------------- ------------
Xxxxxx Xxxxxxxx................................... 60,000 $ 60,000
P. O. Xxx 0000
Xxxx, XX 00000
Xxxxxx G. and Xxxxxxx X. Xxxxxxxx Charitable
Annuity Trust, u/d/t 7/21/83..................... 60,000 60,000
X.X. Xxx 0000
Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Electra X. xx Xxxxxxx............................. 60,000 60,000
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx Xxxx, XX 00000
Xxxxx X. Xxxxxxx.................................. 25,000 25,000
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxxxx.................................. 100,000 100,000
00 Xxxxxxxx Xxxxx #0000
Xxxxxxxxxx, Xxxxxxx
XXXXXX
Xxxxxxxxx X. Xxxxxx............................... 25,000 25,000
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxxxxxxx.............................. 15,000 15,000
A-1 Anand Bhavan
Alacrity Flats
South Bhog Road
X. Xxxxx Xxxxxx 000000
XXXXX
Xxxx Xxxxxxxxxxx.................................. 25,000 25,000
0/0 00xx Xxxxx
Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx 000000
XXXXX
Xxxx X. Xxxxxxxxxx................................ 10,000 10,000
000 X. Xxxxxxx Xxx
Xxxxxx, XX 00000
Xxxxxx Xxxxxx..................................... 20,000 20,000
923 Cowper ------- --------
Xxxx Xxxx, XX 00000
TOTAL.................... 400,000 $400,000
-25-
