S2 TECHNOLOGIES, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
JULY 20, 2000
S2 TECHNOLOGIES, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made and entered into as of July 20, 2000, by and among S2 TECHNOLOGIES, INC., a
California corporation (the "Company"), and each of those persons and entities,
severally and not jointly, whose names are set forth on the Schedule of
Purchasers attached hereto as Exhibit A (which persons and entities are
hereinafter collectively referred to as "Purchasers" and each individually as a
"Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of two million five hundred ninety-two thousand five hundred
ninety-three (2,592,593) shares of its Series A Preferred Stock (the "Shares");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties, and covenants hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (a) the sale and issuance to
Purchasers of the Shares and (b) the issuance of such shares of Common Stock to
be issued upon conversion of the Shares (the "Conversion Shares"). The Shares
and the Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Articles of Incorporation of the Company,
in the form attached hereto as Exhibit B (the "Restated Charter").
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at
the Closing (as hereinafter defined) the Company hereby agrees to issue and sell
to each Purchaser, severally and not jointly, and each Purchaser agrees to
purchase from the Company, severally and not jointly, the number of Shares set
forth opposite such Purchaser's name on Exhibit A, at a purchase price of
twenty-seven cents ($0.27) per share.
1.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place at 4:00 p.m. on the date hereof,
at the offices of Popov & XxXxxxxxx, LLP, Financial Centre, 0000 Xx Xxxxx
Xxxxxxx Xxxxx, Xxxxx 000, Xx Xxxxx, XX 00000 or at such other time or place as
the Company and Purchasers may mutually agree (such date is hereinafter referred
to as the "Closing Date").
2.2 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to each Purchaser a certificate representing
the number of Shares to be purchased at the Closing by such Purchaser, against
payment of the purchase price therefor by check, wire transfer made payable to
the order of the Company, cancellation of indebtedness or any combination of the
foregoing.
2.3 Subsequent Sales of Shares. At any time on or before the 120th day
following the Closing or at such time as the Company and the holders of a
majority of the Shares purchased at the Closing (pursuant to Section 2.1) may
mutually agree, the Company may sell up to the balance of the authorized shares
of Series A Preferred Stock not sold at the Closing to such persons as may be
approved by the Board of Directors of the Company (the "Additional Purchasers").
All such sales made at any additional closings (each an "Additional Closing"),
(i) shall be made on the terms and conditions set forth in this Agreement, (ii)
the representations and warranties of the Company set forth in Section 3 hereof
(and the Schedule of Exceptions) shall speak as of the Closing and the Company
shall have no obligation to update any such disclosure, and (iii) the
representations and warranties of the Additional Purchasers in Section 4 hereof
shall speak as of such Additional Closing. This Agreement, including without
limitation, the Schedule of Purchasers, may be amended by the Company without
the consent of the Purchasers to include any Additional Purchasers and the
Additional Purchaser(s) shall be entitled to rely upon the legal opinion
delivered to the Purchasers at the Closing. Any shares of Series A Preferred
Stock sold pursuant to this Section 2.3 shall be deemed to be "Shares" for all
purposes under this Agreement and any Additional Purchasers thereof shall be
deemed to be "Purchasers" for all purposes under this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions delivered by the
Company to the Purchasers at the Closing, the Company hereby represents and
warrants to each Purchaser as of the date of this Agreement as set forth below.
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and the Investor Rights Agreement in the form attached hereto as
Exhibit C (the "Investor Rights Agreement"), the Co-Sale Agreement in the form
attached hereto as Exhibit D (the "Co-Sale Agreement"), and the Voting Agreement
in the form attached hereto as Exhibit E (the "Voting Agreement") (collectively,
the "Related Agreements"), to issue and sell the Shares and the Conversion
Shares, and to carry out
2.
the provisions of this Agreement, the Related Agreements and the Restated
Charter and to carry on its business as presently conducted and as presently
proposed to be conducted.
3.2 Subsidiaries. The Company does not own or control any equity
security or other interest of any other corporation, limited partnership or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of the Company, immediately prior to
the Closing, consists of (i) ten million (10,000,000) shares of Common Stock,
five million one hundred thousand (5,100,000) shares of which are issued and
outstanding, and (ii) two million five hundred ninety-two thousand five hundred
ninety-three (2,592,593) shares of Preferred Stock, two million five hundred
ninety-two thousand five hundred ninety-three (2,592,593) shares of which are
designated Series A Preferred Stock, none of which are issued and outstanding.
(b) Under the Company's 2000 Equity Incentive Plan (the "Plan"), (i) no
shares have been issued pursuant to restricted stock purchase agreements and/or
the exercise of outstanding options, (ii) no options to purchase shares have
been granted and are currently outstanding, and (iii) one million six hundred
seven thousand four hundred seven (1,607,407) shares of Common Stock remain
available for future issuance to officers, directors, employees and consultants
of the Company.
(c) Other than (i) the shares reserved for issuance under the Plan, and
(ii) warrants to purchase up to seven hundred thousand (700,000) shares of
Common Stock pursuant to that certain Business Consultant and Management
Agreement of even date herewith, and except as may be granted pursuant to this
Agreement and the Related Agreements, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or shareholder agreements, or agreements of any kind for the
purchase or acquisition from the Company of any of its securities.
(d) All issued and outstanding shares of the Company's Common Stock (i)
have been duly authorized and validly issued and are fully paid and
nonassessable, and (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.
(e) The rights, preferences, privileges and restrictions of the Shares
are as stated in the Restated Charter. Each series of Preferred Stock is
convertible into Common Stock on a one-for-one basis as of the date hereof. The
Conversion Shares have been duly and validly reserved for issuance. When issued
in compliance with the provisions of this Agreement and the Restated Charter,
the Shares and the Conversion Shares will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Shares and the Conversion Shares 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.
3.
(f) No stock plan, stock purchase, stock option or other agreement or
understanding between the Company and any holder of any equity securities or
rights to purchase equity securities provides for acceleration or other changes
in the vesting provisions or other terms of such agreement or understanding as
the result of any merger, consolidated sale of stock or assets, change in
control or any other transaction(s) by the Company.
3.4 Authorization; Binding Obligations. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto and the
Conversion Shares pursuant to the Restated Charter has been taken or will be
taken prior to the Closing. The Agreement and the Related Agreements, when
executed and delivered, will be valid and binding obligations of the Company
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (b) general principles
of equity that restrict the availability of equitable remedies, and (c) to the
extent that the enforceability of the indemnification provisions in Section 2.9
of the Investor Rights Agreement may be limited by applicable laws. The sale of
the Shares and the subsequent conversion of the Shares into Conversion Shares
are not and will not be subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with.
3.5 Liabilities. The Company has no material liabilities and, to the
best of its knowledge, knows of no material contingent liabilities, except
current liabilities incurred in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse.
3.6 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and agreements
between the Company and its employees with respect to the sale of the Company's
Common Stock, there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, affiliates or any
affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or to its knowledge by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $10,000 (other than obligations of, or payments to, the Company arising from
purchase or sale agreements entered into in the ordinary course of business), or
(ii) the transfer or license of any patent, copyright, trade secret or other
proprietary right to or from the Company (other than licenses arising from the
purchase of "off the shelf" or other standard products), or (iii)
indemnification by the Company with respect to infringements of proprietary
rights (other than indemnification obligations arising from purchase or sale or
license agreements entered into in the ordinary course of business).
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital
4.
stock, (ii) incurred any indebtedness for money borrowed or any other
liabilities (other than with respect to dividend obligations, distributions,
indebtedness and other obligations incurred in the ordinary course of business)
individually in excess of $10,000 or, in the case of indebtedness and/or
liabilities individually less than $10,000, in excess of $25,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.7 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, shareholders, or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). None of the officers, directors or shareholders of
the Company, or any members of their immediate families, are indebted to the
Company. None of the officers, directors or, to the best of the Company's
knowledge, key employees or shareholders of the Company or any members of their
immediate families, are indebted to the Company or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company, other than passive investments in
publicly traded companies (representing less than 1% of such company) which may
compete with the Company. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
3.8 Title to Properties and Assets; Liens, Etc. The Company has good
and marketable title to its properties and assets, including the properties and
assets reflected in the most recent balance sheet included in the Financial
Statements, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent, (b) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and (c)
those that have otherwise arisen in the ordinary course of business. The Company
is in compliance with all material terms of each lease to which it is a party or
is otherwise bound.
3.9 Intellectual Property.
(a) The Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary for
its business as now conducted and as presently proposed to be conducted, without
any known infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing
5.
proprietary rights, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
other proprietary rights and processes of any other person or entity other than
such licenses or agreements arising from the purchase of "off the shelf" or
standard products.
(b) The Company has not received any communications alleging that the
Company has violated or, by conducting its business as presently proposed in the
Business Plan (as defined in Section 3.21 hereof), 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.
(c) The Company is not aware that any of its employees is obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
that would conflict with the Company's business as presently proposed to be
conducted in the Business Plan. Each employee, officer and consultant of the
Company has executed a proprietary information and inventions agreement in the
form of Exhibit G attached hereto. No employee, officer or consultant of the
Company has excluded works or inventions made prior to his or her employment
with the Company from his or her assignment of inventions pursuant to such
employee, officer or consultant's proprietary information and inventions
agreement. The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company, except for inventions, trade
secrets or proprietary information that have been assigned to the Company.
(d) Neither the execution nor delivery of this Agreement or the Related
Agreements, nor the carrying on of the Company's business by the employees of
the Company, nor the conduct of the Company's business as presently proposed in
the Business Plan, will, to the Company's knowledge, conflict with or result in
a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any employee is now
obligated.
3.10 Compliance with Other Instruments. The Company is not in violation
or default of any term of its Restated Charter or Bylaws, or of any provision of
any mortgage, indenture, contract, agreement, instrument or contract to which it
is party or by which it is bound or of any judgment, decree, order, writ. The
execution, delivery, and performance of and compliance with this Agreement, and
the Related Agreements, and the issuance and sale of the Shares pursuant hereto
and of the Conversion Shares pursuant to the Restated Charter, will not, with or
without the passage of time or giving of notice, result in any such material
violation, 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 or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties. 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
6.
license, distribution agreement or other agreement required to be disclosed on
the Schedule of Exceptions.
3.11 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement, or the Related Agreements or the
right of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change 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 any of the foregoing. The foregoing includes,
without limitation, actions pending or, to the Company's knowledge, threatened
or any basis therefor known by 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.
3.12 Tax Returns and Payments. The Company has filed all tax returns
(federal, state and local) required to be filed by it. All taxes shown to be due
and payable on such returns, any assessments imposed, and to the Company's
knowledge all other taxes due and payable by the Company on or before the
Closing, have been paid or will be paid prior to the time they become
delinquent. The Company has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement that is
not adequately provided for.
3.13 Employees. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company. The
Company is not a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement. To the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company has not received any notice alleging that any such violation has
occurred. No employee of the Company has been granted the right to continued
employment by the Company or to any material compensation following termination
of employment with the Company. The Company is not aware that any officer, key
employee or group of employees intends to terminate his, her or their employment
with the Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of employees.
7.
3.14 Obligations of Management. Each officer and key employee of the
Company is currently devoting substantially all of his or her business time to
the conduct of the business of the Company. The Company is not aware that any
officer or key employee of the Company is planning to work less than full time
at the Company in the future. No officer or key employee is currently working
or, to the Company's knowledge, plans to work for a competitive enterprise,
whether or not such officer or key employee is or will be compensated by such
enterprise.
3.15 Registration Rights and Voting Rights. Except as required pursuant
to the Investor Rights Agreement, the Company is presently not under any
obligation, and has not granted any rights, to register (as defined in Section
1.1 of the Investor Rights Agreement) any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued. To the
Company's knowledge, except as contemplated in the Voting Agreement, no
shareholder of the Company has entered into any agreement with respect to the
voting of equity securities of the Company.
3.16 Compliance with Laws; Permits. The Company is not in violation of
any applicable statute, rule, regulation, order or restriction of any domestic
or foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the issuance of the Shares or
the Conversion Shares, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties, prospects or financial condition of the Company
and believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted in the
Business Plan.
3.17 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will 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. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Shares
to any person or persons so as to bring the sale of such Shares by the Company
within the registration provisions of the Securities Act or any state securities
laws.
3.18 Full Disclosure. The Company has provided the Purchasers with all
information requested by the Purchasers in connection with their decision to
purchase the Shares, including all information the Company believes is
reasonably necessary to make such investment decision. Neither this Agreement,
the exhibits hereto, the Related Agreements nor any other
8.
document delivered by the Company to Purchasers or their attorneys or agents in
connection herewith or therewith or with the transactions contemplated hereby or
thereby, contain any untrue statement of a material fact nor, omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. Notwithstanding the foregoing, the 2000 Business Plan
(the "Business Plan") provided to each of the Purchasers was prepared by the
management of the Company in a good faith effort to describe the Company's
presently proposed business and products and the markets therefore. The
assumptions applied in preparing the Business Plan appeared reasonable to
management as of the date thereof and as of the date hereof; however, there is
no assurance that these assumptions will prove to be valid or that the
objectives set forth in the Business Plan will be achieved. To the Company's
knowledge, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition, prospects or operations of the Company that have not been set forth
in the Agreement, the exhibits hereto, the Related Agreements or in other
documents delivered to Purchasers or their attorneys or agents in connection
herewith.
3.19 Section 83(b) Elections. To the Company's knowledge, all elections
and notices permitted by Section 83(b) of the Code and any analogous provisions
of applicable state tax laws have been timely filed by all employees who have
purchased shares of the Company's common stock under agreements that provide for
the vesting of such shares.
3.20 Insurance. The Company has or will obtain promptly following the
Closing general commercial, product liability, fire and casualty insurance
policies with coverage customary for companies similarly situated to the
Company.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (b) as limited by
general principles of equity that restrict the availability of equitable
remedies, and (c) to the extent that the enforceability of the indemnification
provisions of Section 2.9 of the Investor Rights Agreement may be limited by
applicable laws.
4.2 Investment Representations. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in the Agreement. Purchaser hereby
represents and warrants as follows:
9.
(a) Purchaser Bears Economic Risk. Purchaser has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. Purchaser must bear the economic risk of this investment
indefinitely unless the Shares (or the Conversion Shares) are registered
pursuant to the Securities Act, or an exemption from registration is available.
Purchaser understands that the Company has no present intention of registering
the Shares, the Conversion Shares or any shares of its Common Stock. Purchaser
also understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow Purchaser to transfer all or any portion of the Shares
or the Conversion Shares under the circumstances, in the amounts or at the times
Purchaser might propose.
(b) Acquisition for Own Account. Purchaser is acquiring the Shares and
the Conversion Shares for Purchaser's own account for investment only, and not
with a view towards their distribution.
(c) Purchaser Can Protect Its Interest. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement, and the Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
(d) Accredited Investor. Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
(e) Company Information. Purchaser has received and read the Financial
Statements and Business Plan and has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. Purchaser has also had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment.
(f) Rule 144. Purchaser acknowledges and agrees that the Shares, and,
if issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) Residence. If the Purchaser is an individual, then the Purchaser
resides in the state or province identified in the address of the Purchaser set
forth on Exhibit A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the
10.
office or offices of the Purchaser in which its investment decision was made is
located at the address or addresses of the Purchaser set forth on Exhibit A.
4.3 Transfer Restrictions. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investor Rights Agreement and are subject to voting
requirements as set forth in the Voting Agreement.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchasers' Obligations at the Closing. Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
(b) Legal Investment. On the Closing Date, the sale and issuance of the
Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which Purchasers and the Company are
subject.
(c) Consents, Permits, and Waivers. The Company shall have obtained any
and all consents, permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Agreement and the Related Agreements
(except for such as may be properly obtained subsequent to the Closing).
(d) Filing of Restated Charter. The Restated Charter shall have been
filed with the Secretary of State of the State of California and shall continue
to be in full force and effect as of the Closing Date.
(e) Corporate Documents. The Company shall have delivered to Purchasers
or their counsel, copies of all corporate documents of the Company as Purchasers
shall reasonably request.
(f) Reservation of Conversion Shares. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
(g) Compliance Certificate. The Company shall have delivered to
Purchasers a Compliance Certificate, executed by the President of the Company,
dated the Closing Date, to the effect that the conditions specified in
subsections (a), (c), (d) and (f) of this Section 5.1 have been satisfied.
11.
(h) Secretary's Certificate. The Purchasers shall have received from
the Company's Secretary, a certificate having attached thereto (i) the Company's
Articles of Incorporation as in effect at the time of the Closing, (ii) the
Company's Bylaws as in effect at the time of the Closing, (iii) resolutions
approved by the Board of Directors authorizing the transactions contemplated
hereby, (iv) resolutions approved by the Company's shareholders authorizing the
filing of the Restated Charter, and (v) good standing certificates (including
tax good standing) with respect to the Company from the applicable
authority(ies) in California and any other jurisdiction in which the Company is
qualified to do business, dated a recent date before the Closing.
(i) Investor Rights Agreement. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit C shall have been executed
and delivered by the parties thereto.
(j) Co-Sale Agreement. The Co-Sale Agreement substantially in the form
attached hereto as Exhibit D shall have been executed and delivered by the
parties thereto. The stock certificates representing the shares subject to the
Co-Sale Agreement shall have been delivered to the Secretary of the Company and
shall have had appropriate legends placed upon them to reflect the restrictions
on transfer set forth on the Co-Sale Agreement.
(k) Voting Agreement. The Voting Agreement substantially in the form
attached hereto as Exhibit E shall have been executed and delivered by the
parties thereto.
(l) Business Consultant and Management Agreement. The Business
Consultant and Management Agreement substantially in the form attached hereto as
Exhibit F shall have been executed and delivered by the parties thereto.
(m) Board of Directors. Upon the Closing, the authorized size of the
Board of Directors of the Company shall be three members and the Board shall
consist of Xxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxx Xxxxxxxxx.
(n) Legal Opinion. The Purchasers shall have received from legal
counsel to the Company an opinion addressed to them, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit I.
(o) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchasers and their special counsel,
and the Purchasers and their special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
(p) Proprietary Information and Inventions Agreement. The Company and
each of its employees shall have entered into the Company's standard form of
Proprietary Information and Inventions Agreement, in substantially the form
attached hereto as Exhibit G or in other form reasonably acceptable to the
Purchasers.
12.
(q) Equity Incentive Plan. The Company shall have adopted the 2000
Equity Incentive Plan with a share reserve of one million six hundred seven
thousand four hundred seven (1,607,407) shares.
5.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell the Shares at each Closing is subject to the satisfaction, on
or prior to such Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties in Section 4 made by those Purchasers acquiring Shares hereof shall
be true and correct in all material respects at the date of the Closing, with
the same force and effect as if they had been made on and as of said date.
(b) Performance of Obligations. Such Purchasers shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by such Purchasers on or before the Closing.
(c) Filing of Restated Charter. The Restated Charter shall have been
filed with the Secretary of State of the State of California.
(d) Investor Rights Agreement. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit C shall have been executed
and delivered by the Purchasers.
(e) Co-Sale Agreement. The Co-Sale Agreement substantially in the form
attached hereto as Exhibit D shall have been executed and delivered by the
parties thereto.
(f) Voting Agreement. The Voting Agreement substantially in the form
attached hereto as Exhibit E shall have been executed and delivered by the
parties thereto.
(g) Business Consultant and Management Agreement. The Business
Consultant and Management Agreement substantially in the form attached hereto as
Exhibit F shall have been executed and delivered by the parties thereto.
(h) Consents, Permits, and Waivers. The Company shall have obtained any
and all consents, permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Agreement and the Related Agreements
(except for such as may be properly obtained subsequent to the Closing).
6. MISCELLANEOUS.
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of California as such laws are applied to agreements
between California residents entered into and performed entirely in California.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any
13.
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
6.3 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 and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
6.4 Entire Agreement. This Agreement, the exhibits and schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
6.5 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.6 Amendment and Waiver.
(a) Except as otherwise provided for in Section 2.3, this Agreement may
be amended or modified only upon the written consent of the Company and holders
of at least a majority of the Shares (treated as if converted and including any
Conversion Shares into which the Shares have been converted that have not been
sold to the public).
(b) The obligations of the Company and the rights of the holders of the
Shares and the Conversion Shares under the Agreement may be waived only with the
written consent of the holders of at least a majority of the Shares (treated as
if converted and including any Conversion Shares into which the Shares have been
converted that have not been sold to the public).
6.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Related
Agreements or the Restated Charter, 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 or in 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, the Related
Agreements or under the Restated Charter or any waiver on such party's part of
any provisions or conditions of the Agreement, the Related Agreements, or the
Restated Charter must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, the Related Agreements, the Restated Charter, by law, or otherwise
afforded to any party, shall be cumulative and not alternative.
6.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified,
14.
(b) when sent by confirmed telex or facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, (c) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the Company at the
address as set forth on the signature page hereof and to Purchaser at the
address set forth on Exhibit A attached hereto or at such other address as the
Company or Purchaser may designate by ten (10) days advance written notice to
the other parties hereto.
6.9 Expenses. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement; provided, however, that the Company shall, following the Closing,
reimburse the reasonable fees of and expenses of Xxxxxx Godward LLP as special
counsel to Oryx Technologies, Inc., and shall reimburse such special counsel for
reasonable expenses incurred in connection with the negotiation, execution,
delivery and performance of this Agreement; provided further, that said fees of
and reimbursements to such special counsel shall not exceed $20,000.
6.10 Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.11 Titles and Subtitles. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.13 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.13 being untrue.
15.
6.14 Confidentiality. Each party hereto agrees that, except with the
prior written consent of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement or the Related Agreements,
discussions or negotiations relating to this Agreement or the Related
Agreements, the performance of its obligations hereunder or the ownership of the
Shares purchased hereunder. The provisions of this Section 6.14 shall be in
addition to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by the parties hereto.
6.15 Pronouns. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
6.16 California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed the SERIES A
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASER(S):
S2 TECHNOLOGIES, INC. ORYX TECHNOLOGIES, INC.
Signature: /s/ Xxxx Xxxxxxxxx Signature: /s/ Xxxxxxx Xxxxxxx
--------------------------- -----------------------
Print Name: Xxxx Xxxxxxxxx Print Name: Xxxxxxx Xxxxxxx
-------------------------- ----------------------
Title: CEO Title: Partner
------------------------------- --------------------------
(if applicable)
Address:
----------------------------
----------------------------
[Series A Preferred Stock Purchase Agreement Signature Page]
LIST OF EXHIBITS
Schedule of Purchasers Exhibit A
ii.
EXHIBIT A
SCHEDULE OF PURCHASERS
FIRST CLOSING
AGGREGATE
NAME AND ADDRESS SHARES PURCHASE PRICE
ORYX TECHNOLOGIES, INC. 1,851,852 $500,000.04
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
TOTAL:
----------------- ------------------
1,851,852 $500,000.04
