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EXHIBIT 10.1
DISC, INC.
SERIES O PREFERRED STOCK PURCHASE AGREEMENT
FEBRUARY 20, 1998
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TABLE OF CONTENTS
Page
1. PURCHASE AND SALE OF SERIES O PREFERRED STOCK 1
1.1 Sale and Issuance of Series O Preferred Stock 1
1.2 First Closing 1
1.3 Subsequent Closings 2
1.4 Warrants 2
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2
2.1 Organization and Standing; Articles and Bylaws 2
2.2 Capitalization 2
2.3 Subsidiaries 3
2.4 Authorization 3
2.5 Validity of Shares 3
2.6 Financial Statements 3
2.7 Material Contracts and Agreements 4
2.8 Securities and Exchange Commission Reports of the Company 4
2.9 Title to Properties and Assets; Liens, etc 4
2.10 Patents, Trademarks, etc 4
2.11 Compliance with Other Instruments 4
2.12 Litigation, etc 5
2.13 Employees 5
2.14 Insurance 5
2.15 Governmental Consents 5
2.16 Offering 5
2.17 Full Disclosure 6
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER 6
3.1 Legal Power 6
3.2 Due Execution 6
3.3 Investment Representations 6
4. CONDITIONS TO CLOSING. 7
4.1 Conditions to Obligations of Purchasers at the Closing 7
(a) Representations and Warranties True; Performance of Obligations 7
(b) Opinion of Counsel 8
(c) Certificate of Determination of Preferences 8
(d) Registration Rights Agreement 8
(e) Proceedings and Documents 8
(f) Reservation of Underlying Common Stock 8
(g) Qualifications, Legal Investment 8
(h) Compliance Certificate 8
4.2 Conditions to Obligations of the Company at each Closing 8
(a) Representations and Warranties True 8
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(b) Qualifications, Legal Investment 9
5. COVENANTS OF THE COMPANY 9
5.1 Subsequent Financings 9
6. MISCELLANEOUS 9
6.1 Governing Law 9
6.2 Survival 9
6.3 Successors and Assigns 9
6.4 Entire Agreement 9
6.5 Separability 10
6.6 Amendment and Waiver 10
6.7 Delays or Omissions 10
6.8 Notices, etc 10
6.9 Finders' Fees 11
6.10 Fees and Expenses 11
6.11 Information Confidential 11
6.12 Titles and Subtitles; Gender 11
6.13 Counterparts 11
EXHIBITS
A: Shares Subscribed by Each Purchaser
B: Certificate of Determination of Preferences
C: Form of Warrant
D: Schedule of Exceptions
E: Form of Opinion of Counsel
F: Registration Rights Agreement
G: Form of Supplement to Agreement
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DISC, INC.
SERIES O PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made effective as of February 20 1998, by and between
DISC, INC., a California corporation (the "Company"), and each of the persons
and entities listed (or to be listed pursuant to Section 1.3 below) on the
Schedule of Purchasers attached as Exhibit A hereto (hereinafter collectively
referred to as "Purchasers and each individually as a "Purchaser").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF SERIES O PREFERRED STOCK.
1.1 Sale and Issuance of Series O Preferred Stock.
(a) The Company shall file with the California Secretary
of State on or before the First Closing (as defined below) the Certificate of
Determination of Preferences in the form attached hereto as Exhibit A.
(b) Subject to the terms and conditions of this
Agreement, each Purchaser agrees, severally and not jointly, to purchase at the
Closings pursuant to Section 1.2, and the Company agrees to sell and issue to
Purchaser at the Closing pursuant to Section 1.2, 1,320,755 shares of the
Company's Series O Preferred Stock (the "Shares") for a purchase price of
$1,400,000. In addition, for each four (4) Shares of Preferred Stock purchased
by each Purchaser, such Purchaser shall also be entitled to purchase one (1)
warrant to purchase one (1) share of the Company's Common Stock pursuant to the
terms and conditions set forth in Section 1.4 below (collectively, the
"Warrants"). Any shares of Common Stock issuable upon conversion of the Shares
when issued or upon the exercise of the Warrants when issued are herein referred
to as the "Underlying Common Stock." The Shares, the Warrants and the Underlying
Common Stock are sometimes herein referred to collectively as the "Securities."
(c) The Company will, prior to the First Closing,
authorize and reserve, and covenants to continue to reserve, free of preemptive
rights and other preferential rights, a sufficient number of its previously
authorized but unissued shares of Common Stock to satisfy the rights of
conversion of the Shares and exercise of the Warrants.
1.2 Closing. Each Purchaser agrees to purchase at the Closing (as
hereinafter defined) the number of Shares and Warrants subscribed by such
Purchaser as set forth in Section 1.1 at the offices of Xxxxxxxxx Xxxxx Xxxxxxx
& Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000,
effective as of Xxxxx 0, 0000 (xxx "Xxxxx Xxxxxxx"), or at such other time and
place as the Company and Purchasers acquiring in the aggregate more than
one-half of the shares of Series O Preferred Stock being sold at the First
Closing mutually agree upon orally or in writing. At the First Closing the
Company shall deliver to each Purchaser a stock certificate or stock
certificates registered in such Purchaser's name evidencing the shares of Series
O Preferred Stock which such Purchaser is purchasing at the First
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Closing, and a Warrant certificate or certificates evidencing the Warrants which
such Purchaser is purchasing at the First Closing, against delivery to the
Company by such Purchaser of a wire transfer or a cashier's check in the amount
of the purchase price therefor payable to the Company's order.
1.3 Warrants. Each Purchaser shall purchase and the Company shall
sell and issue to each Purchaser one (1) warrant to purchase one (1) share of
the Company's Common Stock for each four (4) shares of Series O Preferred Stock
purchased by such Purchaser, at a purchase price of $0.01 per warrant. The
exercise price for Warrants issued at the Closing shall be One and 33/100
Dollars ($1.33) per share. Each such Warrant must be exercised by such
Purchaser, if at all, within five (5) years following the date of the Closing.
The Warrants shall be in the form of Exhibit B attached hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as otherwise set forth on the Schedule of Exceptions
attached hereto as Exhibit D, the Company hereby represents, warrants and
covenants to Purchaser as follows:
2.1 Organization and Standing; Articles and Bylaws. The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of California, and has full corporate power and authority
to own and operate its properties and assets and to carry on its business as
presently conducted. The Company is duly qualified and authorized to do
business, and is in good standing as a foreign corporation, in each jurisdiction
where the nature of its activities and of its properties (both owned and leased)
makes such qualification necessary, except where the failure to so qualify would
not have a material adverse effect upon the business and operations of the
Company. The Company has furnished Purchasers or their counsel with copies of
its Articles of Incorporation and its Bylaws, as amended to the date hereof.
Said copies are true, correct, and complete and contain all amendments through
the date of the Closing.
2.2 Capitalization. The authorized capital stock of the Company,
immediately prior to the Closing, will consist of 20,000,000 shares of Common
Stock, no par value, 3,034,545 shares of which are or will be issued and
outstanding as of the Closing, and 5,000,000 shares of Preferred Stock, no par
value, of which 372,296 shares have been designated Series C Preferred Stock,
all of which shares are issued and outstanding, 600,000 shares have been
designated Series D Preferred Stock, 444,444 of which shares are issued and
outstanding, 500,000 shares have been designated Series E Preferred Stock, all
of which shares are issued and outstanding, 250,000 shares have been designated
Series F Preferred Stock, all of which shares are issued and outstanding,
110,000 shares have been designated Series G Preferred Stock, all of which
shares have been issued and outstanding, 26,109 shares have been designated
Series H Preferred Stock, all of which shares have been issued and outstanding
167,065 shares have been designated Series I Preferred Stock, all of which
shares have been issued and outstanding, 244,966 shares have been designated
Series J Preferred Stock, all of which shares have been issued and outstanding,
235,110 shares have been designated Series K Preferred Stock, all of which
shares have been issued and outstanding, 199,275 shares have been designated
Series L Preferred Stock, all of which shares have been issued and outstanding,
179,372 shares have been designated Series M Preferred Stock, all of which
shares have been issued and outstanding, 666,667 shares have been designated
Series N Preferred Stock, all of which shares have been issued and outstanding.
All
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issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued, and are fully paid and nonassessable. Except as
set forth in the Schedule of Exceptions or the Draft Annual Report, there are no
outstanding rights of first refusal, preemptive rights or other rights, options,
warrants, conversion rights, or other agreements either directly or indirectly
for the purchase or acquisition from the Company of any shares of its capital
stock. All of the outstanding shares of Common Stock, Preferred Stock, options
and warrants have been duly and validly issued in compliance with federal and
state securities laws.
2.3 Subsidiaries. The Company has no subsidiaries. The Company
does not presently own or control, directly or indirectly, any equity interest
in any corporation, association or business entity. The Company is not, directly
or indirectly, a participant in any joint venture or partnership.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Registration Rights
Agreement (as defined in paragraph 4.1(d) below) and the Warrants, the
performance of all the Company's obligations hereunder and thereunder, and for
the authorization, issuance, sale and delivery of the Shares and the Underlying
Common Stock has been taken or will be taken prior to the Closing. This
Agreement, the Registration Rights Agreement and the Warrants, when executed and
delivered, shall constitute valid and legally binding obligations of the Company
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and subject to the availability of equitable remedies.
2.5 Validity of Shares. The sale of the Shares and the subsequent
conversions of Shares into the Underlying Common Stock, as well as the issuance
of Underlying Common Stock upon the exercise of any Warrants issued pursuant
hereto are not and will not be subject to any preemptive rights or rights of
first refusal that have not been waived and, when issued, sold and delivered in
compliance with the provisions of this Agreement and/or the Company's Articles
of Incorporation, the Shares, the Warrants and the Underlying Common Stock will
be validly issued, fully paid and nonassessable, and will be free of any liens
or encumbrances; provided, however, that the Shares, the Warrants and the
Underlying Common Stock may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein or as otherwise required by
such laws at the time a transfer is proposed. The Underlying Common Stock has
been (or prior to the Closing, will be) duly and validly reserved.
2.6 Financial Statements. The unaudited balance sheet and
statement of shareholders' equity of the Company as of December 31, 1997,
together with statements of income and cash flows for the fiscal year then
ended, (collectively, the "Financial Statements") heretofore delivered to
Purchasers, fairly present the financial condition of the Company and the
results of its operations as of the dates and for the periods referred to and
have been prepared in accordance with generally accepted accounting principles
consistently applied by the Company. Except as set forth in the Schedule of
Exceptions, there are no material liabilities, direct or indirect, fixed or
contingent, of the Company which are not reflected in the Financial Statements,
or specifically identified in the notes thereto, except for liabilities and
obligations incurred in the ordinary course of business subsequent to December
31, 1997.
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2.7 Material Contracts and Agreements. Except as set forth on the
Schedule of Exceptions, the Company does not have any material contract,
agreement, lease, or other commitment, written or oral, absolute or contingent.
For the purpose of this section, employment contracts and contracts with labor
unions shall be considered to be material regardless of amount. All material
contracts, agreements, and instruments to which the Company is a party are
valid, binding, and in full force and effect in all material respects, without
any material breach by any party thereto.
2.8 Securities and Exchange Commission Reports of the Company.
The Company has furnished Purchasers with copies of its Annual Report on Annual
Report for the fiscal year ended December 31, 1997 and its Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1997, June 30, 1997, and September
30, 1997, and the Proxy Statement for its last annual meeting of shareholders,
as filed with the Commission (collectively the "SEC Filings"). As of the date
the SEC Filings were made, the SEC Filings (i) were accurate and complete in all
material respects, (ii) complied in all material respects with the provisions of
the Securities Act and the Exchange Act, respectively, and the rules and
regulations of the Commission promulgated under the Securities Act and the
Exchange Act, respectively, and (iii) did not contain any untrue statement of
material fact or omit to state any material information required to be set forth
therein, or necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. The
Company has filed with the Commission all reports required to be filed by it
during the last twelve months, including, without limitation, all Current
Reports on Form 8-K.
2.9 Title to Properties and Assets; Liens, etc. The Company has
good and marketable title to its properties and assets, and good title to all
its leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, or charge, other than (a) liens resulting from taxes which have not
yet become delinquent, or (b) minor liens, encumbrances, or defects of title
which do not, individually or in the aggregate, materially detract from the
value of the property subject thereto or materially impair the operations of the
Company. With respect to property it leases, the Company is in compliance with
such leases in all material respects.
2.10 Patents, Trademarks, etc. To the best of its knowledge, the
Company owns and possesses or is licensed under all patents, patent
applications, licenses, trademarks, service marks, trade names, inventions,
processes, formulae, trade secrets, franchises, copyrights and other proprietary
rights necessary for the operation of its business as now conducted and as
proposed to be conducted with no known infringement of or conflict with the
rights of others. To the best of its knowledge and belief, such ownership,
possession or license is exclusive and not subject to termination without the
Company's consent. The Company is not aware of any third party that is
infringing or violating any of its patents, licenses, trademarks, service marks,
trade names, inventions, processes, formulae, trade secrets, franchises,
copyrights or other proprietary rights.
2.11 Compliance with Other Instruments. The Company is not in
violation of any term of its Articles of Incorporation or Bylaws, any material
mortgage, indenture, contract, agreement, instrument, judgment, decree, order,
or, to the best of its knowledge, any statute, rule or regulation applicable to
the Company which would have a material adverse effect on the
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business or financial condition of the Company. The execution, delivery, and
performance of and compliance with this Agreement, and the issuance and sale of
the Shares and the Warrants pursuant hereto and the Underlying Common Stock
pursuant to the Articles of Incorporation and the Warrants, will not result in
any violation of any term of the Articles of Incorporation or Bylaws of the
Company, or any material mortgage, indenture, contract, agreement, instrument,
judgment, decree or order, or be in conflict with or constitute a default under
any such term, or result in the creation of any mortgage, pledge, lien,
encumbrance, or charge upon any of the properties or assets of the Company; and
there is no term of the Articles of Incorporation or Bylaws of the Company or
any material mortgage, indenture, contract, agreement, instrument, judgment,
decree or order which materially adversely affects, or, so far as the Company
may now reasonably foresee, in the future may materially adversely affect the
business, operations or financial condition of the Company.
2.12 Litigation, etc. Except as set forth in the Schedule of
Exceptions, there are no actions, proceedings, or investigations before any
court, or administrative agency pending or, to the best of the Company's
knowledge, currently threatened against or with respect to the Company (or any
basis therefor known to the Company), which question the validity of this
Agreement or any action taken or to be taken in connection herewith, or which,
either individually or in the aggregate, might result in a material adverse
change in the business, prospects, conditions, affairs, or operations of the
Company or in any of its properties or assets, or in any material impairment of
the right or ability of the Company to carry on its business as now conducted or
as proposed to be conducted, or in any material liability on the part of the
Company. The Company is not a party or subject to, and none of its assets are
bound by, the provisions of any order, writ, injunction, judgment, or decree of
any court or governmental agency or instrumentality. There is no action, suit,
proceeding, or investigation by the Company currently pending or that the
Company intends to initiate.
2.13 Employees. The Company has no collective bargaining
agreements with any of its employees and to the best of the Company's knowledge
there is no labor union organizing activity pending or threatened with respect
to the Company. Except for the existence of health and welfare plans, the
Company does not maintain and has not maintained any pension, profit sharing or
similar plan which is subject to the Employee Retirement Income Security Act of
1974, as amended.
2.14 Insurance. The Company has adequate insurance with respect
to its properties that are of a character customarily insured by entities
engaged in the same or a similar business similarly situated, against loss or
damage of the kinds customarily insured against by such entities, which
insurance is of such types (including public liability insurance) as are
customarily carried under similar circumstances by such other entities.
2.15 Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of the Company
in connection with the valid execution and delivery of this Agreement and the
Registration Rights Agreement, the offer, sale or issuance of the Shares, the
Warrants and the Underlying Common Stock, or the consummation of any other
transaction contemplated hereby have been obtained, or will be effective at the
Closing, except
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for notices required or permitted to be filed with certain state and federal
securities commissions after the Closing, which notices will be filed on a
timely basis.
2.16 Offering. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 3.3 hereof, the offer, issue,
and sale of the Shares, the Warrants and the Underlying Common Stock are and
will be exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit, or qualification requirements of all applicable state
securities laws.
2.17 Full Disclosure. Neither this Agreement, the representations
and warranties by the Company contained herein, the Exhibits hereto, nor any
other written statement or certificate delivered or to be furnished to
Purchasers in connection herewith, when read together, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Each Purchaser hereby severally, and not jointly, represents and
warrants to the Company as follows:
3.1 Legal Power. It has the requisite legal power to enter into
this Agreement, to purchase the Shares and Warrants hereunder, to convert the
Shares into and/or exercise the Warrants for, Underlying Common Stock, and to
carry out and perform its obligations under the terms of this Agreement.
3.2 Due Execution. This Agreement has been duly authorized,
executed and delivered by it, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding obligation of it.
3.3 Investment Representations.
(a) It is acquiring the Shares and Warrants and will
acquire the Underlying Common Stock for its own account, not as nominee or
agent, for investment and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the 1933 Act.
(b) It understands that (i) the Shares, the Warrants and
the Underlying Common Stock have not been registered under the 1933 Act by
reason of a specific exemption therefrom, that they must be held by it
indefinitely, and that it must, therefore, bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the 1933 Act or is exempt from such registration; (ii) each certificate
representing the Shares and the Underlying Common Stock will be endorsed with
the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED
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OR HYPOTHECATED UNLESS RULE 144 IS AVAILABLE OR THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING SUCH SECURITIES OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT."
and (iii) the Company will instruct any transfer agent not to register
the transfer of any of the Shares or the Underlying Common Stock unless the
conditions specified in the foregoing legend are satisfied; provided, however,
that no such opinion of counsel shall be necessary if the sale, transfer or
assignment is made pursuant to Rule 144 under the 1933 Act and Purchaser
provides the Company with evidence reasonably satisfactory to the Company and
its counsel that the proposed transaction satisfies the requirements of Rule
144. The Company agrees to remove the foregoing legend from any securities if
the requirements of Rule 144(k) under the 1933 Act (or any successor rule or
regulation) apply with respect to such securities and the Company and its
counsel are provided with reasonably satisfactory evidence that the requirements
of Rule 144(k) apply.
(c) It is an investor in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Shares and the Underlying Common Stock.
(d) It is an "accredited investor" within the meaning of
SEC Rule 501 of Regulation D, as presently in effect.
(e) It understands that the Shares it is purchasing and
any Underlying Common Stock issued upon the conversion thereof 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 securities may
be resold without registration under the 1933 Act, only in certain limited
circumstances, and it represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the 1933 Act.
(f) Purchaser was not formed for the specific purpose of
acquiring the Shares and the Underlying Common Stock offered hereunder.
(g) Its principal business address is as set forth in
Section 5.8 hereto.
4. CONDITIONS TO CLOSING.
4.1 Conditions to Obligations of Purchasers at the Closing.
Purchasers' obligations to purchase the Shares and the Warrants at each Closing
are subject to the fulfillment, at or prior to such Closing, of all of the
following conditions:
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(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 2
hereof shall be true and correct on the date of such Closing, with the same
force and effect as if they had been made on and as of said date; the business
and assets of the Company shall not have been adversely affected in any material
way prior to such Closing, and the Company shall have performed all obligations
and conditions herein required to be performed by it on or prior to such
Closing.
(b) Certificate of Determination of Preferences. The
Certificate of Determination of Preferences, in the form set forth as Exhibit A
hereto, shall have been filed with the Secretary of State of the State of
California on or before such Closing.
(c) Registration Rights Agreement. The Company and
Purchasers shall have entered into the Registration Rights Agreement in the form
of Exhibit F attached hereto.
(d) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at such Closing and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to Purchaser, and Purchaser shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
(e) Reservation of Underlying Common Stock. The shares
of the Underlying Common Stock shall have been duly authorized and reserved for
issuance.
(f) Qualifications, Legal Investment. All
authorizations, approvals, or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Shares, the Warrants and the
Underlying Common Stock pursuant to this Agreement shall have been duly obtained
and shall be effective on and as of such Closing. No stop order or other order
enjoining the sale of the Shares and the Warrants or the proposed issuance of
the Underlying Common Stock shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company, threatened by the
Securities and Exchange Commission, the California Commissioner of Corporations,
or any commissioner of corporations or similar officer of any other state having
jurisdiction over this transaction. At the time of such Closing, the sale and
issuance of the Shares and the Warrants and the proposed issuance of the
Underlying Common Stock shall be legally permitted by all laws and regulations
to which Purchaser and the Company are subject.
(g) Compliance Certificate. The Company shall have
delivered to Purchaser a Certificate, executed by J. Xxxxxxx Xxxxx, President
and Chief Executive Officer of the Company, dated the date of such Closing,
certifying to the fulfillment of the conditions specified in subparagraphs (a),
(c), (f) and (g) of this Section 4.1.
4.2 Conditions to Obligations of the Company at each Closing. The
Company's obligation to issue and sell the Shares under this Agreement is
subject to the fulfillment to the Company's satisfaction, on or prior to each
Closing, of the following conditions, any of which may be waived by the Company:
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(a) Representations and Warranties True. The
representations and warranties made by Purchasers in Section 3 hereof shall be
true and correct at the date of such Closing, with the same force and effect as
if they had been made on and as of said date.
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(b) Qualifications, Legal Investment. All
authorizations, approvals, or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Shares and the Warrants
pursuant to this Agreement shall have been duly obtained and shall be effective
on and as of such Closing. No stop order or other order enjoining the sale of
the Shares and the Warrants or the proposed issuance of the Underlying Common
Stock shall have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of the Company, threatened by the Securities and
Exchange Commission, the California Commissioner of Corporations, or any
commissioner of corporations or similar officer of any other state having
jurisdiction over this transaction. At the time of such Closing, the sale and
issuance of the Shares and the Warrants and the proposed issuance of the
Underlying Common Stock shall be legally permitted by all laws and regulations
to which Purchaser and the Company are subject.
5. MISCELLANEOUS.
5.1 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, made and to be performed entirely within the State
of California.
5.2 Survival. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by Purchasers and
the closing of the transactions contemplated hereby.
5.3 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto.
5.4 Entire Agreement. This Agreement, the Exhibits hereto, and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
5.5 Separability. Any invalidity, illegality, or limitation of
the enforceability with respect to any Purchaser of any one or more of the
provisions of this Agreement, or any part thereof, whether, arising by reason of
the law of any Purchaser's domicile or otherwise, shall in no way affect or
impair the validity, legality, or enforceability of any other term or provision
of this Agreement. In case any provision of this Agreement shall be invalid,
illegal, or unenforceable, it shall, to the extent practicable, be modified so
as to make it valid, legal and enforceable and to retain as nearly as
practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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5.6 Amendment and Waiver. 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, either retroactively or prospectively,
and either for a specified period of time or indefinitely), with the written
consent of the Company and Purchasers subscribing for or holding a majority of
the Shares. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon all of the Purchasers, each future holder of any of the
Securities and the Company. Upon the effectuation of each such amendment or
waiver, the Company shall promptly give written notice thereof to the record
holders of the Shares, the Warrants and the Underlying Common Stock who have not
previously consented thereto in writing.
5.7 Delays or Omissions. No delay or omission to exercise any
right, power, or remedy accruing to any Purchaser or any subsequent holder of
any Shares upon any breach, default or noncompliance of the Company under this
Agreement or under the Articles of Incorporation, shall impair any such right,
power, or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent, or approval of any kind or character on any Purchaser's
part of any breach, default or noncompliance under this Agreement or under the
Articles of Incorporation or any waiver on any Purchaser's part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing, and that
all remedies, either under this Agreement, the Articles of Incorporation, by
law, or otherwise afforded to such Purchaser, shall be cumulative and not
alternative.
5.8 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or on the third day following mailing by registered or
certified mail, return receipt requested, postage prepaid, addressed: (a) if to
a Purchaser, at Purchaser's address as set forth under Purchaser's signature at
the end of this Agreement, or at such other address as such Purchaser shall have
furnished to the Company in writing, or (b) if to the Company, at its address as
set forth at the end of this Agreement, or at such other address as the Company
shall have furnished to Purchaser in writing, in each case with a copy to X.X.
Xxxxxx, Esquire, Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
5.9 Finders' Fees.
(a) The Company (i)represents and warrants that it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and (ii)hereby agrees to indemnify and to hold Purchasers
harmless of and from any liability for any commission or compensation in the
nature of a finder's fee to any broker or other person or firm (and the costs
and expenses, including reasonable attorneys' fees, of defending against such
liability or asserted liability) for which the Company or any of its employees
or representatives is responsible.
(b) Each Purchaser (i)severally, and not jointly,
represents and warrants that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement, and (ii)hereby agrees to
indemnify and to hold the Company harmless of and
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from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses,
including reasonable attorneys' fees, of defending against such liability or
asserted liability) for which such Purchaser or any of its employees or
representatives are responsible.
5.10 Fees and Expenses. The Company agrees to pay all of its
fees, costs and expenses relating to this Agreement, the Registration Rights
Agreement, and the transactions contemplated by such agreements. Each Purchaser
agrees to pay all of its fees, costs and expenses relating to this Agreement,
the Registration Rights Agreement, and the transactions contemplated by such
agreements. If legal action is brought by, or on behalf of, one or more
Purchasers to enforce or interpret this Agreement, the prevailing party or
parties shall be entitled to recover their attorneys' fees and legal costs in
connection therewith.
5.11 Information Confidential. Each Purchaser acknowledges that
the information received by it pursuant hereto is confidential and for
Purchaser's use only, and it will refrain from using such information or
reproducing, disclosing, or disseminating such information to any other person
(other than its employees, affiliates, agents, or partners having a need to know
the contents of such information and its attorneys), except in connection with
the exercise of rights under this Agreement, unless the Company has made such
information available to the public generally or it is required by a
governmental body to disclose such information.
5.12 Titles and Subtitles; Gender. The titles of the paragraphs
and subparagraphs of this Agreement are for convenience of reference only and
are not to be considered in construing this Agreement. Words in any gender shall
include the other and neuter genders, where applicable.
5.13 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
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The foregoing Agreement is hereby executed as of the date first above
written.
Address:
000 Xxxxxxxxx Xxxxxx DISC, INC.
Xxxxxxxx, XX 00000
By: /s/ J. Xxxxxxx Xxxxx
J. Xxxxxxx Xxxxx,
President and Chief Executive Officer
PURCHASERS:
Address:
0000 X. Xxxxxxxx Xxxx XX GVD FUND, a California limited partnership
Xxxx Xxxx, XX 00000
By:
MK GVD Management,
a California limited partnership
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
one of its general partners
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EXHIBIT A
CERTIFICATE OF DETERMINATION OF PREFERENCES
Exhibit A
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EXHIBIT B
SCHEDULE OF EXCEPTIONS
Exhibit B
