Exhibit 5.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
October 2, 2002 by and among TippingPoint Technologies, Inc., a Delaware
corporation (the "Company"), and the purchasers identified on the signature
pages hereto (the "Purchasers"). The Company desires to sell, and the Purchasers
desire to purchase shares (the "Shares") of the Company's common stock, $0.01
par value per share (the "Common Stock"), with the aggregate purchase price of
$10,000,000, on the terms and subject to the conditions set forth herein.
Accordingly, the Company and the Purchasers hereby agree as follows:
1. Agreement to Purchase. At the Closing (as defined below), and subject
to the terms and conditions set forth in this Agreement, each Purchaser will
purchase from the Company, and the Company will issue and sell to such
Purchaser, the number of Shares determined by dividing the dollar amount set
forth on the signature page executed by such Purchaser by a purchase price per
Share equal to the arithmetic mean of the closing bid price of the Common Stock
on the Nasdaq National Market for the five trading days ending on October 1,
2002 ("Market Value"). The Company will not issue fractional Shares. If the
total number of Shares issuable to a Purchaser is not divisible by the purchase
price per Share, the Purchaser will receive the next lowest whole number of
Shares.
2. Closing. The closing of the purchase and sale of the Shares (the
"Closing") shall take place at 2:00 p.m. local time at the principal offices of
the Company on October 2, 2002, or on such other date or at such other time or
place as the Company and the Purchasers may agree. Upon payment of the purchase
price for the Shares being purchased by each Purchaser, by check or wire
transfer of immediately available funds to an account specified by the Company,
the Company will deliver to such Purchaser a certificate or certificates
representing such Shares, in such denominations and registered in such names as
such Purchaser may request.
3. Separate Agreements. The Company's agreement with each of the
Purchasers is a separate agreement, and the sale of the Shares to each of the
Purchasers is a separate sale.
4. Representations, Warranties and Covenants of the Company. The Company
represents and warrants to, and covenants with, each Purchaser as of the date
hereof and as of the Closing Date, as follows:
(a) 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
to carry out the transactions contemplated in this Agreement. The Company is
duly qualified and in good standing to do business as a foreign corporation in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on its business or properties.
1
(b) The Company has taken all corporate action required to authorize
the execution and delivery of this Agreement and the Registration Rights
Agreement attached hereto as Exhibit A (the "Registration Rights Agreement") and
the performance of its obligations hereunder and thereunder, including the
issuance of the Shares. This Agreement and the Registration Rights Agreement are
legal, valid and binding agreements of the Company enforceable against the
Company in accordance with their respective terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought.
(c) When issued to and paid for by the Purchasers in accordance with
the terms of this Agreement, the Shares will be duly and validly issued, fully
paid and nonassessable, and the issuance of the Shares will not be subject to
any preemptive or similar rights that have not been waived.
(d) As of the date of this Agreement, the authorized and outstanding
capitalization of the Company consists of (i) a total of 5,000,000 authorized
shares of preferred stock, $0.01 par value per share (the "Preferred Stock"),
none of which is issued or outstanding, and (ii) a total of 250,000,000
authorized shares of Common Stock, of which 4,072,437 shares were issued and
outstanding as of the close of business on September 19, 2002. All of such
outstanding shares are validly issued, fully paid and nonassessable, and none of
such outstanding shares was issued in violation of any preemptive rights. In
addition to the foregoing, as of September 19, 2002, options to purchase a total
of 653,295 shares of Common Stock are outstanding, 33,464 shares of restricted
Common Stock, which are subject to forfeiture under certain circumstances, is
reserved for issuance and the Company is authorized to grant up to 203,432
additional shares of Common Stock pursuant to its existing stock incentive plan.
Also, as of September 19, 2002, a warrant to purchase 40,000 shares of Common
Stock was outstanding. Otherwise, there are not outstanding any options,
warrants or similar agreements for the purchase from the Company of any shares
of its capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the Company's capital stock.
(e) Neither the sale of the Shares hereunder nor the performance of
the Company's other obligations under this Agreement will violate, conflict
with, result in a breach of or constitute a default (or an event that, with
notice or lapse of time, would constitute a default) under (i) the certificate
of incorporation or bylaws of the Company; (ii) any decree, judgment, order or
determination of any court, governmental agency or body, or any arbitrator
having jurisdiction over the Company or any of the Company's assets; (iii) any
law, rule or regulation applicable to the Company, other than federal or state
securities laws; or (iv) the terms of any material agreement by which the
Company is bound or to which any property of the Company is subject. Neither the
sale of the Shares hereunder nor the performance of the Company's other
obligations under this Agreement will result in the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, right or approval applicable to the Company, its businesses or
operations or any of its assets or properties. Based in part on the
representations made by each of the Purchasers in this
2
Agreement, the offer and sale of the Shares to each of the Purchasers will be in
compliance with applicable federal and state securities laws.
(f) Neither the Company nor any person acting on behalf of the Company
has offered or sold any of the Shares by any form of general solicitation or
general advertising. The Company has offered the Shares for sale only to the
Purchasers and certain other "accredited investors" within the meaning of Rule
501 under the Securities Act of 1933, as amended (the "Securities Act").
(g) The Company's Annual Report on Form 10-K for the year ended
December 31, 2001, the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended April 30, 2002 and July 31, 2002, all Current Reports on
Form 8-K filed by the Company since December 31, 2001, and the Confidential
Offering Memorandum (the "Offering Memorandum") of the Company dated September
6, 2002 (collectively, the "Disclosure Documents"), as of the respective dates
thereof, do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided however, that the Company makes no
representation or warranty that the Company will achieve the projections
appearing in the Offering Memorandum, except that the Company believes that all
assumptions used in the preparation of these projections are reasonable. Except
for the Offering Memorandum, all Disclosure Documents have been prepared in all
material respects in compliance with the requirements of the Securities Act or
the Securities Exchange Act of 1934, as amended (the "1934 Act"). The Company
has timely made all filings required under the 1934 Act during the 12 months
preceding the date of this Agreement.
(h) The financial statements of the Company included in each of the
Disclosure Documents, including the schedules and notes thereto, comply in all
material respects with the requirements of the Securities Act or the 1934 Act
(as applicable) fairly present the financial condition and results of operations
and cash flows of the Company and its subsidiaries at the respective dates and
for the respective periods indicated and have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout such periods. The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
GAAP and the applicable requirements of the 1934 Act.
(i) Since July 31, 2002, there has been no material adverse change in
the properties, business, results of operations or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole.
(j) Subject in part to the truth and accuracy of each Purchaser's
representations set forth in Section 5 of this Agreement, no consent, approval,
order or 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 filings under
applicable federal and state securities laws which may be made after the
Closing.
3
(k) Except as set forth in the Disclosure Documents, the Company has
sufficient title and ownership of, or licenses to all material patents,
trademarks, trade names, copyrights, trade secrets, information, proprietary
rights and processes ("Intangible Property") (without, to the Company's
knowledge, conflict with or infringement of the rights of others) necessary for
its businesses as now conducted and as currently proposed to be conducted.
Except as set forth in the Disclosure Documents, (i) the Company has not granted
any other person any option, license, or other right with respect to the
Company's Intangible Property, which option, license or other right is currently
outstanding, and (ii) the Company is not bound by or a party to any material
options, licenses or agreements of any kind (other than standard end-user
agreements) with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity. Except as set forth in the Disclosure
Documents, the Company has not received any written communications alleging that
it has violated or, by conducting its business as currently proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other person or entity,
where such violation would have a material adverse affect on the Company's
business or properties.
(l) Except as set forth in the Disclosure Documents, the Company is
not in violation or default (i) of any provision of its certificate of
incorporation or bylaws, as amended, or (ii) in any material respect of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound, except, with respect to clause (ii), where such violation
or default would not have a material adverse affect on the Company's business or
properties, nor is the Company, to the Company's knowledge, in violation of any
provision of any federal or state statute, rule or regulation applicable to the
Company, which violation would have a material adverse affect on the Company's
business or properties.
(m) The Common Stock is registered pursuant to Section 12(g) of the
1934 Act, and is listed on the Nasdaq National Market (the "Nasdaq Stock
Market"), and the Company has taken no action designed to, or which to its
knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the 1934 Act or delisting the Common Stock from the Nasdaq
Stock Market. The issuance of the Shares does not require stockholder approval,
including, without limitation, pursuant to the Nasdaq Marketplace Rules.
(n) Except for matters that are not reasonably expected to have a
material adverse effect on the business or properties of the Company, the
Company has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the
Company has no knowledge of a tax deficiency which has been asserted or
threatened against the Company.
5. Representations and Warranties of the Purchasers. Each Purchaser
(severally and not jointly) represents and warrants, as of the date hereof and
as of the Closing, as follows:
(a) Such Purchaser has the capacity to enter into this Agreement and
to purchase the Shares from the Company pursuant to the terms and conditions of
this Agreement.
4
This Agreement is a legal, valid and binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(b) Such Purchaser understands that the issuance of the Shares
hereunder has not been registered under the Securities Act, based on the
exemption from registration provided by Section 4(2) of the Securities Act, and
that the Company's reliance on such exemption depends in part on such
Purchaser's representations and warranties in this Agreement.
(c) Such Purchaser is acquiring the Shares for its own account for
investment purposes and not with a view to the distribution thereof within the
meaning of the Securities Act.
(c) Such Purchaser understands that the Shares constitute "restricted
securities" within the meaning of Rule 144 under the Securities Act and may not
be sold, pledged or otherwise disposed of unless they are subsequently
registered under the Securities Act and applicable state securities laws or
unless an exemption from registration is available.
(d) Such Purchaser is an "accredited investor" within the meaning of
Rule 501(a) under the Securities Act, who by reason of such Purchaser's business
and financial experience has such knowledge and experience in financial and
business matters that such Purchaser is capable of evaluating the merits and
risks of an investment in the Shares. Such Purchaser has had the opportunity to
ask questions of, and receive answers from, the Company and its officers and
agents and has received all information concerning the Company that such
Purchaser has requested in connection with his purchase of the Shares.
(e) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over such
Purchaser or of such Purchaser's affiliates is required for the execution of
this Agreement or the performance of such Purchaser's obligations hereunder,
including, without limitation, the purchase of the Shares from the Company.
(f) If such Purchaser is a corporation, partnership or other entity,
such Purchaser has taken, or prior to the Closing will have taken, all
corporate, partnership or other action (as applicable) required to authorize the
execution and delivery of this Agreement and the performance of its obligations
hereunder.
(g) Such Purchaser understands that no federal or state or other
governmental agency has passed upon or made any recommendation or endorsement
with respect to the Shares.
(h) Such Purchaser acknowledges that the Company may be required to
file this Agreement with the Securities and Exchange Commission, and to describe
the transactions contemplated by this Agreement in such filing, and subsequent
filings, and such Purchaser hereby consents to such filing. Such Purchaser also
acknowledges that, due to its percentage
5
ownership of outstanding shares of the Common Stock after Closing, it may be
required to make certain filings with the Securities and Exchange Commission,
and such Purchaser hereby agrees to make such filings in a timely manner.
(i) Such Purchaser understands that any certificates evidencing
the Shares will bear substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY
NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION."
6. Conditions to Closing. The obligations hereunder of the Company,
on the one hand, and each of the Purchasers, on the other hand, shall be subject
to (a) the accuracy of the representations and warranties of the other as of the
date hereof and as of the Closing Date, as if such representations and
warranties had been made on and as of such date, (b) the performance by the
other of its or their obligations hereunder that are required to be performed at
or prior to the Closing and (c) the Registration Rights Agreement shall have
been executed and delivered by the Company and each of the Purchasers, and shall
be in full force and effect.
7. Survival of Representations and Warranties. The respective
agreements, representations, warranties and other statements made by or on
behalf of each party hereto pursuant to this Agreement shall remain in full
force and effect, regardless of any investigation made by or on behalf of any
party, and shall survive delivery of any payment for the Shares.
8. Miscellaneous.
(a) The terms and conditions of this Agreement and the
Registration Rights Agreement represent the entire agreement between the parties
with respect to the subject matter hereof and thereof, and supersedes any prior
agreements or understandings, whether written or oral, between the parties
respecting such subject matter. This Agreement may be modified only in a writing
signed by the party against whom such modification is to be enforced.
(b) This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors, and no other person
shall have any right or obligation hereunder. No Purchaser may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company, and the Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of each
Purchaser. Any assignment contrary to the terms hereof shall be null and void
and of no force or effect.
6
(c) This Agreement shall be construed and enforced in
accordance with the laws of the state of Delaware applicable to agreements
between residents of Delaware wholly executed and wholly performed therein.
(d) This Agreement may be executed in one or more counterparts,
and such counterparts shall together constitute one and the same agreement.
(e) All notices and other communications required or permitted
hereunder shall be in writing and, except as otherwise noted herein, shall be
addressed as follows:
(i) if to the Company, to:
TippingPoint Technologies, Inc.
0000X Xxxxx Xxxxxxx xx Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx, Vice President and
General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxx, L.L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxxx
Fax: (000) 000-0000
(ii) if to any Holder, at the address shown on
such Holders signature page hereto, marked
for attention as there indicated, to:
or to such other address as the party to whom notice is to be given may have
furnished to the other in writing in accordance with the provisions of this
Section 8(e). Any such notice or communication shall be deemed to have been
received: (x) in the case of telecopy or personal delivery, on the date of such
delivery; (y) in the case of nationally-recognized overnight courier, on the
next business day after the date sent; and (z) if by registered or certified
mail, on the third business day following the date postmarked.
(f) The descriptive headings herein have been inserted for
convenience only and shall not be deemed to limit or otherwise affect the
construction of any provisions hereof.
9. Indemnification. The Company agrees to indemnify and hold
harmless each Purchaser, its respective subsidiaries, any affiliate of any of
them and their respective officers, directors and employees (collectively, the
"Indemnified Parties") from and against any liabilities, obligations, losses,
damages, amounts paid in settlement, penalties, actions, judgments, fines,
suits, claims, costs, attorneys' fees, expenses and disbursements of any kind
("Losses") which may be imposed upon, incurred by or asserted against any
Indemnified Party in any manner
7
relating to or arising out of any untrue representation, breach of warranty or
failure to perform any covenants or agreement by such Company contained herein,
in the Registration Rights Agreement or in any certificate or document delivered
pursuant hereto. The Company shall also advance expenses as incurred to the
fullest extent permitted under applicable law; provided, however, that the
Indemnified Party provides an undertaking to repay such advances to Company if
it is ultimately determined that such Indemnified Party is not entitled to
indemnification. Purchasers and Company will cooperate in the defense of any
such matter. Notwithstanding anything to the contrary contained in this
Agreement, the amount to which any Indemnified Party shall be entitled pursuant
to this Section 9 shall be limited to the Losses actually sustained by such
Indemnified Party, net of any tax benefits actually derived by such Indemnified
Party in respect of such Losses.
IN WITNESSES WHEREOF, the parties have entered into this Agreement as
of the date first set forth above.
TIPPINGPOINT TECHNOLOGIES, INC.
By: __________________________________________
Xxxxx X. Xxxxxx,
Vice President, General Counsel and
Secretary
8
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
The undersigned hereby executes this counterpart signature page of the
Stock Purchase Agreement, dated as of October 2, 2002, by and among TippingPoint
Technologies, Inc. and certain Purchasers, including the undersigned.
Pursuant to this Agreement, the undersigned Purchaser is purchasing
shares of Common Stock with an aggregate purchase price of $_________________,
with the purchase price per share being equal to Market Value.
_______________________________________
Name of Purchaser (Please print)
By: ___________________________________
(Signature)
By: ___________________________________
(Second signature, if necessary)
Print Name: ___________________________
Title: ________________________________
Address: ______________________________
_______________________________________
_______________________________________
Phone: ________________________________
Fax: __________________________________
9
